InterGlobe Aviation to set up subsidiary for financing aviation assets

InterGlobe Aviation, the parent of the country’s largest airline IndiGo, will set up a subsidiary with an investment of up to Rs 30 crore for financing aviation assets.

The wholly-owned subsidiary will be set up in GIFT City.

The company’s board on Monday approved the proposal to incorporate a wholly-owned subsidiary with an investment of “up to Rs 30 crore in one or more tranches”.

Besides, it will issue corporate guarantees of up to USD 996 million or an equivalent amount in Indian rupees or any other currency, to secure the payment obligations of the wholly-owned subsidiary, according to a regulatory filing.

The company said the subsidiary would be into financing aviation assets and approvals will be sought from the Reserve Bank of India (RBI), among others.

The investment of up to Rs 30 crore will be made in “one or more tranches through equity/quasi-equity/ optionally convertible preference shares/ optionally convertible debt instruments or any combination thereof,” the filing said.

In another filing, the company said it has approved placing the order for 10 additional A320 NEO aircraft with Airbus and executing the amendment agreement to the purchase agreement.

These 10 aircraft will be part of the original 300 aircraft order of 2019.

IndiGo has a domestic market share of more than 63 per cent and is expanding its international operations. It has nearly 1,000 aircraft on order.

On August 2, InterGlobe Aviation said it would set up a venture capital arm to make investments in early-stage companies that are in aviation, consumer and allied sectors.

The Limited Liability Partnership (LLP) will focus on investment in startups operating in aviation, consumer and allied sectors, such as travel & lifestyle, hospitality and transportation.

Shares of InterGlobe Aviation gained marginally to close at Rs 2,451.95 apiece on BSE on Monday.