India’s government is seeking expressions of interest from investors following its approval, in principle, for the divestment of flag-carrier Air India – with the entire share capital on offer, along with the whole of Air India Express and 50% of its handling joint venture AISATS.
Financial services specialist EY has been appointed to advise and manage the proposed transaction.
Air India’s authorised capital – as of November last year – stood at Rp350 billion ($4.9 billion) and its paid-up share capital amounts to Rp326.6 billion with all the shares held by the president of India.
The formal preliminary information memorandum for the divestment states that Air India, along with Air India Express, has a 50.6% share of international Indian traffic among domestic carriers and an 18.4% share including other global operators.
It adds that the Star Alliance company has 98 destinations, of which 56 are domestic, and offers 75 others through its codeshares.
The document details the carriers’ fleets and gives an overview of the Indian airline market as well as the country’s ground-handling market.
It sets out the proposed reallocation of debt and liabilities from the date that any divestment transaction closes. The document says the debt to be retained in Air India and Air India Express will remain at Rp232.86 billion. There will be no reallocation of debt and liabilities of AISATS.
Through the publishing of the memorandum the government is providing interested bidders – whether individuals or members of a consortium – with information on the company and instructions for submitting an expression of interest.
These expressions must be put forward by 17 March.
Bidders have the option to access the “virtual data room” as well as confidential information.
Interested bidders shortlisted after this first stage will be permitted to participate in the second stage, through which they will receive a request for proposals, continued access to the virtual data room, and other information.
“The [qualifying bidders] will be required to undergo a transparent bidding process for the proposed transaction,” says the memorandum.
Qualified bidders who participate in the financial bid submission will be required to apply for a security clearance process, to which the completion of the transaction will be subject. The highest bidder in compliance with the terms of the request for proposals will be considered the confirmed selected bidder.
Air India has interests in other entities, including its engineering services division, all of which are being transferred to a separate company – Air India Assets Holding – and will not be part of the divestment.
