Air India Privatisation: US Based Fund Interups, Tata Sons among prime bidders

Debt-laden Air India has now become a test case on how to get investor interest in adversarial market conditions.

New Delhi: US based funds agency Interups Inc is set to file an Expression of Interest for Air India on Monday. Interups Inc Chairman Lakshmi Prasad has made official confirmation regarding the same.

Prasad said that the bid will be surprising for everyone. As per Zee Media sources Tata Group will also file an Expression of Interest for Air India.Tata group will use Air Asia as a vehicle where Tata Sons has a significant majority stake (51 percent). Interestingly, Hinduja group is also reported to be one of the frontrunners for Air India bid.

It may be noted that the deadline to bid for Air India disinvestment ends at 5pm on December 14 while the submission of physical bid has been scheduled for December 29.

As per the Air India EoI floated by DIPAM in January, of the airline's total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding Ltd (AIAHL), a special purpose vehicle, an IANS report had earlier mentioned.

With the proposed changes, buyers will decide on the level of debt that they will take and the one taking the largest debt may be considered favourable to be declared winner.

For the government, Air India has now become a test case on how to get investor interest in adversarial market conditions. While the airlines financials are already under severe pressure, the Covid -19 pandemic had further dented the prospects of the aviation industry putting the sale process under further problems. The bidding process for the debt-ridden airline has been postponed four times earlier and of October 30 deadline is changed now, it would be fifth such extension.

Air India has been been unprofitable since its 2007 merger with state-owned domestic operator Indian Airlines Ltd., and since then is flying on government budgetary support adding pressure to central resources.

Air India disinvestment will be a key component of this years sell target of Rs 2.1 lakh crore. The government has so far mobilised a mere Rs 5,500 crore as disinvestment receipt.

With Agency Inputs