Jetprivilege stake sale struggles to take off
MUMBAI: Private equity giants Blackstone Group LP and TPG Capital, which are eyeing a stake in the loyalty programme of Jet Airways (India) Ltd are having second thoughts due to worries over the airline’s financial health, said three people directly aware of the matter.
Both PE firms have already offered indicative term sheets valuing Jetprivilege Pvt. Ltd at close to $900 million, but they realise that the future of this business depends largely on how well Jet Airways runs its overall operations, the people cited above said on condition of anonymity.
They said while there is consensus on the terms of a potential deal, a binding offer may take more time depending on how things pan out in the coming weeks.
Mint
reported on August 20 that TPG and Blackstone were in race to buy a significant stake in Jetprivilege.
“Both TPG and Blackstone are yet to take a final call on the investment, although they continue to remain engaged,” said the first of the three persons cited above. “It is well acknowledged that the equity infusion via the stake sale in Jetprivilege which is expected to fetch anywhere between $300 to $400 million is the surest way to shore up equity, but the PE firms are equally apprehensive whether an infusion will be good enough to see Jet Air- ways through the current turbulence,” the person said.
Jet Airways incurred a fiscal first-quarter loss of ₹1,323 crore, excluding its units. It was the second straight quarterly loss for the carrier. According to the latest available data, Jetprivilege posted a 30.5% rise in revenue to ₹509 crore in FY17. It had a net worth of ₹1,744 crore as of Marchend 2017 as per audited filings. Jetprivilege was incorporated in 2012 as a wholly-owned unit of Jet Airways, but was hived off as an independent entity in 2014 after Etihad bought a 50.1% stake for $150 million valuing the firm at $300 million. Etihad’s investment in Jetprivilege was part of its overall $600 million investment in the airline announced in April 2013.
Blackstone and TPG did not respond to emailed queries.