EY, ROTHSCHILD AND CYRIL AMARCHAND TO ADVISE ON AIR INDIA STAKE SALE
EY, the consultancy entity, and investment bankers Rothschild have been chosen as transaction advisors for the proposed disinvestment of state-owned airline Air India. Legal firm Cyril A march and Mangaldas will act as legal advisor. KPMG, Shardul A march and Mangaldas, and Luthra & Luthra made it to the final round in technical bids. They were then edged out by the winners in financial bidding; the advisory fees quoted by the latter were lower.
EY, the consultancy entity, and investment bankers Rothschild have been chosen as transaction advisors for the proposed disinvestment of stateowned airline Air India. Legal firm Cyril Amarchand Mangaldas will act be legal advisor for the process.
KPMG, Shardul Amarchand Mangaldas and Luthra & Luthra made it to the final round in technical bids. They were then edged out by the winners in financial bidding; the advisory fees quoted by the latter were lower.
According to sources, EY and Rothschild, according to their quote, will get 0.2 per cent of the total transaction value. “It is too low for such a complicated deal, compared to the international benchmark. The process not only includes the property of Air India but of its five subsidiaries,” said a person who attended the process.
For acting as legal advisor, Cyril Amarchand Mangaldas quoted 1.2 per cent of the total deal as their advisory fee in the presentation.
AI has 142 aircraft — 65 of the A-320, 15 of B-777 aircraft, 24 of the B-787, 23 of the 737800, 11 ATRs and four B-747.
Apart from the main company, five AI subsidiaries and a joint venture are in the strategic sale plan. These are its low cost airline, Air India Express; ground handling arm, Air India Air Transport Service; maintenance, repair and overhaul subsidiary Air India Engineering Services; regional connectivity operator Airline Allied Service; Hotel Corporation of India and Air India’s 50:50 joint venture with Singapore Air Transport Services for ground handling activities.
Among the investment brokerages that bid for transaction adviser are KPMG, EY, Rothschild & Co, BNP Paribas, ICICI Securities and Edelweiss Financial Services. The law firms included Hammurabi and Solomon Partners, Cyril Amarchand Mangaldas, Shardul Amarchand Mangaldas, Crawford Bayley and Co, Luthra and Luthra, ALMT Legal and Trilegal. October 23 was the last date for bids.
The department of investment and public asset management had invited an Expression of Interest for appointing transaction advisors and law firms in assisting the strategic sale. Bidders were to have handled a transaction of at least ~4,000 crore between April 1, 2012, and June 30, 2017.
The process’ next stage will be after the transaction advisor reads the market and assists the government to form the bid for AI. This will state the sale norms and eligibility conditions for bidder. The government is yet to decide on whether to sell the airline’s domestic business separately or how to treat the five subsidiaries.
A Group of Ministers is looking into the treatment of AI’s unsustainable debt, the hiving off of some assets to a shell company, demerger and strategic divestment of three profit-making subsidiaries, among other aspects.