India’s youngest airline, Akasa Air, is planning to raise $75-100 million by offering fresh shares, The Economic Times (ET) reports. The airline is doing this to expand its business, people aware of the development were cited in the report.
Moreover, the airline also needs funds to pay for its pre-delivery commitments for aircraft. Earlier, Akasa had placed an order for 72 Boeing 737 Max; out of this, 19 aircraft have already been delivered, the report said.
To raise the money, Akasa Air has approached potential investors, which include PE firms and high net-worth individuals, the people cited above told ET. The capital will be raised, keeping the valuation of Akasa Air as a benchmark valued at $650 million.
The US-based hedge fund PAR Capital Management will likely increase its holding in the airline, ET reported. Currently, it holds a 6 per cent stake.
When concluded, the fundraising will dilute the Jhunjhunwala family’s ownership of the company. As things stand, the family holds around 46 per cent stake in Akasa Air.
There is little clarity on the extent of dilution of the family’s stake, but the family will likely maintain its position as the largest stakeholder in the airline, the report added.
ICICI Securities predicts a positive future for the airline, thanks to the healthy growth in traffic and declining jet fuel prices.
People cited above told ET that the Jhunjhunwala family reserves the right of first refusal on any equity fundraising that Akasa plans.
Starting its operations last year, Akasa Air has leveraged its startup advantage to design a low-cost structure with reduced lease rents. The easy availability of pilots after the pandemic also helped Akasa.
Currently, Akasa Air maintains a fleet of 19 aircraft and holds a four per cent market share. In an earlier announcement, the airline’s CEO, Vinay Dube, had said that it was planning to place a triple-digit aircraft order by the end of the year.
