Goair files for IPO, looks to raiseup to ₹3,600crore
Before the IPO, it plans to raise up to ₹1,500 cr through preferential allotment of shares
NEW DELHI: Wadia Group-controlled Go Airlines (India) Ltd on Friday began the process of becoming the fourth listed carrier in India as it filed a draft prospectus with the market regulator for an initial share sale to raise up to ₹3,600 crore.
Goair, which has rebranded itself as Gofirst, aims to raise funds through the sale of new shares, according to its draft red herring prospectus (DRHP) filed with the Securities Exchange Board of India, a copy of which has been reviewed by Mint.
In addition, the budget airline plans to raise up to ₹1,500 crore through a preferential placement of shares prior to the initial public offering (IPO), according to the prospectus.
ICICI Securities, Citi and Morgan Stanley are managing the share sale.
The net proceeds will be utilised to mainly repay debt. Of the ₹3,600 crore Go Airlines hopes to raise, it plans to utilise ₹2,015.81 crore for payment and scheduled repayment of outstanding borrowings, ₹279.26 crore for replacement of letter of credits with cash deposits for securing lease rental payments and aircraft maintenance from leasing companies and ₹254.93 crore to repay dues to Indian Oil
Corp. Ltd towards jet fuel purchases, Goair said in the draft prospectus.
Interglobe Aviation Ltd (Indigo), Spicejet Ltd and Jet Airways (India) Ltd are the only listed airlines. Jet Airways has, however, grounded its flights since April 2019, and its resolution is awaiting approval from the bankruptcy tribunal that will likely allow the carrier to resume flights under a new owner.
Go Airlines’ plan to raise funds comes at a time when a fragile recovery of India’s civil aviation sector from the first wave of Covid-19 last year has been brought to a sudden halt by a raging second wave this year. This has led many states to impose curbs to contain the spread of the infection, severely hurting the aviation sector.
Go Airlines will, however, be hoping to catch the bullish investor sentiment that has led Indian stock markets to surge over 56% in the past year.
During this period, Indigo and Spicejet jumped over 74% and 60%, respectively, while Jet soared over 333%.
“Market has money, and investors have confidence in the market. This is evident as the stock market is rising even during the coronavirus pandemic. IPO is more to do with investor confidence than the underlying condition of the sector. The funding will give Goair some advantage over rivals when the sector bounces back,” said Nripendra Singh, research head and strategy consultant-aviation at Frost & Sullivan.
Go Airlines turned to a loss of ₹1,278.60 crore in 2019-20 compared with a profit of ₹123.34 crore during 2018-19, according to the latest available data from the corporate affairs ministry.
According to figures compiled by research platform Tofler, the airline’s net worth stood at a negative ₹1,500 crore in 2019-20, while cash and cash equivalents stood at ₹112 crore.
Indian airlines are expected to incur net losses of about ₹21,000 crore this fiscal due to the pandemic and would require additional funding of up to ₹37,000 crore through 2022-23 to recover from their losses and debt, according to credit rating agency Icra.
In its IPO document, Go Airlines warned that Covid-19 has adversely impacted its operating results, financial condition and liquidity, and another pandemic could result in additional adverse impact to its business.