Gangwal family to sell IndiGo’s stake worth Rs 3,730 cr via block deal

The Gangwal family, promoter of IndiGo Airlines, is likely to sell shares worth Rs 3,730 crore through a block deal on Wednesday, according to a term sheet. This development is part of promoter Rakesh Gangwal’s plan to bring down his equity stake in the company.

The offer floor price for the deal is Rs 2,400 per share, which is a 5.8 per cent discount to the company’s last closing price of Rs 2,549 per share. The Gangwal family has put up 15.6 million shares as part of the sale, which represents approximately 4 per cent of its existing total outstanding shares in the company.

The total stake of the promoters in InterGlobe Aviation currently stands at 67.77 per cent, of which Gangwal and his related entities’ stake is pegged at 29.72 per cent as of June 2023, as per BSE data. With the block sale, Gangwal family’s stake in the company would come down to 25.72 per cent.

Morgan Stanley, JPMorgan and Goldman Sachs are bankers to the deal.

IndiGo did not immediately respond to Business Standard’s emailed requests for statements on the matter.

A block deal is where shares valued at more than Rs 5 crore or minimum 500,000 shares of a listed company are sold in one tranche.

Rakesh Gangwal had resigned from the board of directors of the company in February last year. He had stated that he will gradually reduce his equity stake in the company over the next five years.

The Gangwal family owned a 36.61 per cent stake in InterGlobe Aviation in June 2022. The other co-promoter, Rahul Bhatia, and his related entities had a holding of 38.17 per cent during the same time last year.

Moreover, in September last year, the Gangwal family sold approximately 2.8 per cent stake in the company through block deals for around Rs 2,000 crore. It had further brought down their holdings to 33.78 per cent in the company.

In February this year, they had reduced their stake by a further approximately 4 per cent for around Rs 2,900 crore on a block deal. This reduced their holding to the current 29.72 per cent in the company.

One of the founders of IndiGo, Gangwal was the president and chief executive officer of US Airways Group from 1998 until his resignation in 2001. He later served as head of travel technology firm Worldspan Technologies before setting up IndiGo with Rahul Bhatia.

The airline posted its highest ever quarterly consolidated net profit at Rs 3,090.6 crore for the first quarter of 2023-24 (FY24). In Q1 of last financial year, the carrier had incurred a consolidated net loss of Rs 1,064.2 crore. It had previously recorded its highest ever quarterly net profit in the third quarter of last financial year at Rs 1,422.6 crore.

IndiGo is India’s largest domestic airline by market share. It ferried 7.68 million passengers in July this year and holds a 63.4 per cent market share, according to data from the Directorate General of Civil Aviation (DGCA).

The company’s shares ended Monday’s session 1.33 per cent higher at Rs 2,548.35 on the BSE. Its market capitalisation stands at Rs 98,313 crore.