Air Deccan to float IPO after boosting market presence

Friday, 28 January 2005, 08:00 Hrs
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BANGALORE: Air Deccan, India's only low-cost airline, will decide on floating a share sale offer in the domestic market only after boosting its presence in the fast-growing aviation sector, said a top official.

Refuting reports that the Bangalore-based airline has decided to launch its initial public offering (IPO) by September 2006, the official said no timeframe has been fixed for launching the share sale programme.

"We want private equity and it will happen through IPO. But we have not decided any timeframe for this," G.R. Gopinath, chief executive officer of Air Deccan, told IANS in an telephonic interview from Singapore.

"There are lots of issues that need to be considered before we decide a timeframe for the IPO. Before we hit the market, we want to establish a strong brand presence and increase the load factor," he added.

"All this may take may take 12-36 months. The IPO will definitely happen after all the issues are taken care of."

Gopinath said although Air Deccan was aiming to generate between $250 million and $300 million through the IPO, the actual size of the share sale offer would be decided "at an appropriate time."

"The equity to be divested would depend on the valuation of the company at that time," he said, adding the funds raised through Air Deccan's IPO would be utilised for expansion activities.

Analysts say the increased investor appetite for quality public issues has enthused many local aviation players to tap the market to generate funds for acquiring new planes and start new services.

Private sector Jet Airways, the biggest domestic airline, has already submitted a draft prospectus with the Securities and Exchange Board of India (SEBI), the capital market watchdog, for floating 20 percent of its equity capital.

The share sale offer will make Jet Airways the only actively traded airline stock in India.

Air Deccan said last month that it had entered into agreements with ICICI Venture Funds and US-based Capital International for raising $40 million by placing new shares.

The budget airline plans to have a fleet of 60 aircraft in five years' time with a view to adding new routes in its network in the domestic market as well as strengthening existing services.

Air Deccan, which started operations in August 2003, currently operates three Airbus 320s and seven 48-seater aircraft. Three more ATR aircraft are likely to be added in the fleet soon.

Source: IANS
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