Government counts on liberal terms for Air India sale success
The government is counting on investors outside the airline industry as suitors for Air India to keep competition high for the national carrier that is up for sale.
Neeraj Kumar Gupta, secretary in the department of investment and public asset management (DIPAM) said here that the eligibility criteria for the strategic disinvestment is only financial and does not require investors to have prior experience in the aviation sector.
“We are not talking about the technical or managerial expertise of the investor (in the bid document) so that there is an equal opportunity. Even in the case of Air India, we are not looking at airlines alone,” said Gupta.
Speaking at the India investment conference organised jointly by industry chamber Assocham and Private Equity and Venture Capital Association of India, Gupta said so far the department has received a lot of queries and clarifications regarding the Air India disinvestment from prospective airline and non-airline investors.
Allowing investors with a strong financial position to bid in a consortium with other businesses, widens the pool of potential bidders for the assets the government
NEW DELHI:
is exiting.
The emphasis on government welcoming businesses other than airlines on an equal footing with airlines for the 76% stake in Air India comes after some airlines opted out of the race.
Jet Airways (India) Ltd recently stated that it is not participating, while InterGlobe Aviation Ltd, the operator of IndiGo airline, said it has no capability to successfully turn around Air India.
Gupta said the financial prudence displayed by the government makes private investors, including venture capital and private equity investors, key players in economic growth and that the process of disinvestment in state-owned enterprises offers an investment opportunity to them.
As per the bid document released last month, investors with a minimum net worth of ₹5,000 crore and track record of reporting profit after tax (PAT) in three of the previous five financial years are eligible to bid for 76% stake in Air India, 100% stake in Air India Express Ltd and 50% stake in Air India SATS Airport Services Pvt. Ltd.
He added that several public sector companies which are good brownfield projects needing capital for technology acquisition offer scope for private equity and venture capital funds to invest in. Gupta said “transformational” reforms taken so far like the rollout of Goods and Services Tax (GST) and bankruptcy reforms indicated the resolve of the government to take on thorny issues head on.