India’s oldest private sector aircraft maintenance repair and overhaul firm (MRO) Air Works is preparing for an initial public offer to raise about Rs 700 crore through issue of fresh shares and part stake sale by promoters and existing investors.
A source familiar with the development said the company plans to use the proceeds for business expansion. The IPO is expected in 12-15 months, the source added.
Air Works did not respond to an email query seeking comments on the topic. Founded in 1951 by brothers B G Menon and P S Menon, Air Works is the largest MRO in India servicing charter and private jets.
Over the last few years it has expanded business in other areas such as aircraft painting and aircraft asset management with acquisitions of companies in Europe and the Gulf region and its overseas business now contributes about 2/3rd of its revenue. Last year it acquired Irish firm Acumen Aviation which focuses on data management solutions for aircraft owners and lessors.
The Menon family owns about 14% stake in Air Works and the balance is held by other investors GTI Capital, Punj Lloyd, New Enterprise Associates, Elephant Capital and its chief executive officer Vivek Gour.
” It will be both primary and secondary share sale. The promoters and other investors will sell part of the holding but will not be exiting the company. The draft civil aviation policy with its tax concessions and other reforms is favourable for the MRO sector and existing owners see value in staying invested in the company,” the source added. The IPO and offer for sale of existing shares is expected to be 50:50 basis.
Last October the company had denied media report that promoters and investors were looking for an exit.
At present, Indian carriers outsource about 90% of their Rs 5500 crore worth repair and maintenance work to companies abroad. This is partly because of the limited capabilities of domestic service providers and partly because of the high tax structure in India.
The proposed tax sops and reforms are expected to give a boost for the domestic players. With airlines looking to expand their fleet, the opportunities are only set to grow bigger. Indian carriers have a combined fleet of 440 aircraft and orders for 689 new planes have been placed. Then, there is also the potential to get additional business from owners of private jets and helicopters whose combined number stands at 550.
