It is in talks with multiple private equity investors as it tries to sell shares in the logistics arm to raise money
SpiceJet, India’s second-largest private airline, kicked off the process of hiving off its logistics business to its subsidiary SpiceXpress as it looks to raise much-needed capital. On Tuesday, the company sought its shareholders’ approval to complete the process and to raise up to Rs 2,500 crore via a qualified institutions placement (QIP).
It is in talks with multiple private equity investors as it tries to sell shares in the logistics arm to raise money.
While sources in the airline had earlier indicated that they value the business at $1 billion, the company on Tuesday pegged it at Rs 2,555.77 crore based on an independent valuation.
People aware of SpiceJet’s plan indicated that investors have made it clear that they want the cargo business to be at an arm’s length from the passenger business. “Prospective investors wanted ring-fencing of the cargo and passenger businesses,” said a person aware of the development.
The airline has also approached the Ministry of Civil Aviation for a new Air Operator Permit for the cargo arm and has also set up management separate from the passenger business.
However, the sources added that the airline has to seek multiple approvals, including from lenders. The airline said it expects SpiceXpress to operate as a separate entity upon transfer of business on or around October 1.
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