Vijay Mallaya Aims for a stake in Spice Jet

The Liquor Baron and boss of Kingfisher Airlines has set his eyes on acquiring at least a 26% stake in the low-cost carrier Spice Jet. His talks with its chief promoter, Mr.Bhupendra Kamnagra in Europe is reported to have entered its final stages. The Dubai based Investment Firm Istithmer PJSC which is also holding a significant stake is also involved in the negotiations.

At the current valuation of Rs.600 Crores or so, Vijay Mallaya would have to fork out between 145 and 155 Crores if the deal goes through. It is said to be beneficial for both the parties for the following reasons.

Spice Jet is said to be losing on an average Rs.70 Lakhs a day, thanks to the runaway increases in oil prices. Its efforts to raise 100 Million Dollars through debt-equity route did not materialize so far. With the lock-in period for Kansagra and Istithmer having come to an end, they prefer to unlock their stakes. It appears to be a wise decision for Kansagra who despite the fact of being involved in Aviation in India ever since the Open Sky Policy was announced never made any profit in this field.

For Vijay Mallya, this opportunity is a blessing in disguise as he would become the undisputed king of Indian Aviation Industry. While Kingfisher can still cater to premium segment, Deccan and spice Jet can cover the lower-cost markets. This means he gets more pie out of existing market share.

The development is seen by the Industry Watchers as a final phase in the consolidation of Indian Aviation Industry. This is especially so because of the fact that Go Airlines may also opt for a similar route.

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