TPG Capital has been an aggressive player in the aviation sector, frequently partnering with airlines and bidding for opportunities. However, it has had a mixed record on its investments and operations in airlines globally.
Hence, though it does not come as a surprise that the US private equity (PE) fund has submitted an expression of interest (EoI) to buy Jet Airways, the question is whether it will make the cut or not.
Its tryst in the Indian aviation sector is not new.
In 2007, it was reportedly in talks to pick up a 10-15 per cent stake in IndiGo, though it was never confirmed. Once again, it was in the reckoning last year for buying out Jet’s 50 per cent stake in Jet Privilege — the loyalty program unit — when the cash-strapped carrier was looking for funds to pare debt.
The firm was pitted against Blackstone for the deal, which was eventually put on the back-burner. According to people in the know, when Delta was looking to buy a stake in Jet, they approached TPG seeking an alliance. TPG, however, never commented on its interest. Goyal had approached the Delta-KLM-Air France group given Jet had an alliance, and used their hubs to fly to the US.
Closer home, Sri Lankan Airlines was looking for a private partner to help them turn around the airline, which was making huge losses after Emirates’ exit.
In 2017, TPG Capital was among three bidders to pick up a 49 per cent stake in the airlines, but it pulled out of talks on a potential acquisition, after a due diligence on the airlines.
TPG has picked up some successful aviation deals in the global sweepstakes, especially in the earlier years, after which it has been much quieter. Once a bankruptcy lawyer, founder David Bonderman’s involvement in the airline business is reflected in the fact that he has been chairman of Ryanair for two decades and has investments in the airline in his personal capacity. In addition, he made an ambitious but failed bid, with the support of the unions, to buy out Boeing’s commercial aircraft business in 2003.
In 1994, TPG put $40 million after American West emerged from bankruptcy, and was able to make much more money than it had put in. It also bought a stake in Continental Airlines and made a huge profit by selling its stake.
In 2008, it tied up with Northwest Airlines to buy out Midwestern Airlines, but had to sell it off without making money.
There were many others that did not go through. For instance, their most ambitious attempt was to tie up with US Airways group to bid for American Airlines’ (then the third largest in the US) parent AMR Corp. Eventually, the US Airways group and AMR merged to become a single entity.
The PE fund made an aborted bid for Air Canada in 2003-2004, but the airline was taken over by creditors, with assistance of Cerebrus Capital Management. It was also one of the contenders to buy out troubled Alitalia in 2007, but nothing materialised.
It made a bid for Iberia Lineas Aereas de Espana, but withdrew after opposition to their offer. Further, it attempted to enter Australia through a consortium, in which it was a partner. Though it bid for Qantas Airlines, it faced strong shareholder resistance. Finally, it lost a bid in 1999 to buy a minority stake in South African Airways, which was undergoing privatisation to Swissair. Will it be luckier in India?