Akasa Air eyes $75-100 million via fresh equity: Report
1 min read 15 Jun 2023, 07:59 AM ISTOne of the existing stakeholders, US-based hedge fund PAR Capital Management, which currently owns approximately a 6% stake in the company, may consider subscribing to the new shares being offered.
PremiumAkasa Air, a new Indian airline supported by the late billionaire Rakesh Jhunjhunwala, is planning to raise $75-100 million through the issuance of new shares in order to expand its operations.
Mint independently could not confirm the reported developments at this time.
As reported by The Economic Times citing sources, the funds raised will be utilized for making pre-delivery payments for aircraft. Akasa Air has placed an order for 72 Boeing 737 Max planes, out of which 19 have already been delivered.
Akasa Air has approached potential investors, including private equity firms and high net-worth individuals, to raise funds for its expansion, according to sources. The fundraising effort is based on a valuation of $650 million for the airline.
One of the existing stakeholders, US-based hedge fund PAR Capital Management, which currently owns approximately a 6% stake in the company, may consider subscribing to the new shares being offered.
The upcoming fundraising round is expected to result in a reduction of the Jhunjhunwala family's stake in the airline. Currently, the family holds approximately 46% of the shares through a trust. While the exact extent of the stake dilution is not known, a source familiar with the matter mentioned that the trust will retain its position as the largest shareholder even after the fundraising.
"The trust is unlikely to participate in this round of funding but even after the dilution will retain a substantial stake. The aviation sector is on a boom and the value of Akasa with strong financials and led by professionals will only rise," he said.
According to brokerage firm ICICI Securities, the airline industry's outlook remains robust, attributed to strong growth in air traffic, decreasing jet fuel prices, and rising ticket prices.
Additionally, one of the individuals mentioned earlier indicated that the Jhunjhunwala family holds a right of first refusal concerning any equity fundraising initiatives undertaken by Akasa Air.
Having commenced operations last year, Akasa Air has leveraged its startup status to create a cost-effective framework, benefitting from reduced lease rents and a surplus of available pilots following the impact of the COVID-19 pandemic.
As per the report, the airline initially received a startup capital injection of $50 million from the Jhunjhunwala family, and with additional gains from aircraft sale and leaseback arrangements, the venture secured a capital base of $300-350 million, enabling its successful launch.