Corporate Grapevine

Published: Dec 29, 2021
Updated: Dec 29, 2021

Wadia airline IPO still in the hangar

The much-trumpeted IPO to raise Rs 3,600 crore by GoFirst Airline, an ultra low-cost airline owned by the Wadia family, may not to be see the light of day very soon. Though it is difficult to quantify the delay, it is certain that the company won’t be entering the market at least for the next six months. Some pessimistic observers even believe that the issue may be delayed by a year or so.

Though the issue is already finalized and the management has decided how the proceeds of the issue will be used to pay off the debt and improve the company’s financial performance, there are two factors that may derail the plan. First, the aviation sector is in bad shape on account of the pandemic and there is little appetite among investors for aviation stocks. Secondly, there is a feud within the Wadia family over the brand name. While the company is promoted by Jehangir Wadia, popularly known as ‘Jeh’ Wadia, the brand ‘GoAir’ is owned by the family (read ‘Nusli Wadia’).

As the IPO is sure to be delayed and no one knows when the obstacles against it will be removed, the airline is now working on ‘plan B’ to raise up to $ 500 million. As per sources, the airline has initiated talks with a host of investors, including private equity funds, who will invest in the airline and then dilute their stake during the IPO. Talks are ongoing and it will be interesting to see which fund takes the big step of investing in the airline.