Having failed to raise fund through preferential allotment of shares, no-frills carrier SpiceJet is considering global depository receipts (GDR) and follow-on public offer (FPO) to raise up to $75 million.
"The company board on Monday approved the plan to raise funds via various routes—QIP, GDR, ADR and FPO," the airline's CEO Sanjay Aggarwal told FE.
Aggarwal said the board had earlier given permission to proceed with looking at preferential allotment route which is a limited way to explore expanding the investor base. Shares of SpiceJet closed down 2.67% at Rs 51.10 on BSE on Tuesday.
SpiceJet is the only BSE-listed airline to report net profit for the full year ended March 31, 2010. The private carrier registered a net profit of Rs 61.4 crore against a loss of Rs 352.5 crore in the previous year. For the quarter ending March 31, 2010, the airline's net profit stood at Rs 27.5 crore on revenues of Rs 587 crore.
In March, SpiceJet had said it would prefer raising fund through preferential allotment of shares. The carrier has appointed financial services firm Edelweiss, along with IDFC-SSKI Securities, as co-fund manager to find a suitable investor. An industry analyst wondered as to why the airline needed to raise money. "The airline has cash on its balance sheet. They have made profit and are expected to report profit for this year also. At the same time no major expansion is planned," he said. The company is looking for a strong investor following the exit of the Dubai-based investment firm, Istithmar. The Dubai firm earlier this year sold almost all of its 13% stake in the airline for about Rs 160 crore.
The US-based distress fund Wilbur Ross had in 2008 announced to invest $80 million in SpiceJet. The hedge fund is, however, now believed to be planning its exit. London-based Kansagra family, one of the promoters of low-fare airline, is also reported to be keen to sell its stake in the company. “Similar to WL Ross and Company I have no knowledge of their (Kansagra's) intention to their investment,” Aggarwal said.
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