Foreign funds are continuing to flow into India’s fast-growing low-cost airline sector, with government investment companies from Dubai and Singapore agreeing to buy into recently launched Delhi-based SpiceJet.
The carrier launched its first operations in May and is already listed on the Mumbai stock exchange. SpiceJet says that, subject to regulatory and shareholder approval, Singapore-based MacRitchie Investments and Dubai-based private equity firm Istithmar will invest $20 million.
Istithmar is owned by the Dubai government, while MacRitchie is a wholly owned subsidiary of Singapore government investment arm Temasek Holdings. Temasek is the majority owner of Singapore Airlines and has stakes in other airlines including low-cost carriers Jetstar Asia and Tiger Airways.
SpiceJet did not say what percentage stake the joint $20 million investment would give the companies, saying only that the investment would be made as per a pricing formula laid down by the Securities and Exchange Board of India.
Interest has grown rapidly over the past year in India’s low-cost airline sector as a result of significant expansion in demand. Air Deccan, which pioneered the low-cost concept in India, earlier secured foreign investment, while SpiceJet already has several other foreign investors.
SpiceJet launched services in from Delhi with leased Boeing 737-800s and has committed to purchasing of the type directly from Boeing. Foreign investors include major international financial institutions.
Source: Airline Business
