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BW Businessworld

IndiGo Likely To Take The IPO Route Soon

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Sensing possible changes to the rules for Indian carriers looking to fly abroad, one of the country’s profitable carriers Indigo Airline may soon file a draft red herring prospectus with the market regulator Securities and Exchange Board of India. Experts said this may turn out to be the biggest IPO in the country’s civil aviation sector.
According to market buzz, the airline is looking to raise up to Rs 2,000-2,400 crore through the initial public offer (IPO) route. The money raised will be utilised to fund its fleet expansion. The carrier may look at acquiring some long-haul aircrafts to service destinations in North and South America, Europe, Australia and Africa among others.
According to, six bankers - Citigroup, Kotak, Morgan Stanley, JP Morgan Chase, UBS & Barclays - have been appointed as book runners for the IPO. “The money raised via the IPO will be used to fund expansion plans and increase IndiGo's presence globally,” the report said. The listing process is expected to be completed by the fourth quarter of calendar year 2015. The pricing of the IPO will depend on the timeline as to when it hits the market post approvals.
Indigo currently has a 36 per cent market share which is expected to cross 50 per cent in next 24 months according to global aviation consultancy CAPA. In its report titled Indian Aviation Outlook, CAPA has estimated that IndiGo will grab 40 percent of the domestic aviation market this fiscal itself. So, this definitely bodes well for the airline that is expected to go for a public offer soon.
Experts said a large part of IndiGo's success comes from its ability to outdo its competitors. Indigo began operations in 2005-06 with an order for 100 Airbus 320 aircraft that have been completed. Rivals like SpiceJet and Go Air have a fleet size which is about 20 per cent of Indigo’s 100 aircrafts. Indigo has a fleet of 96 operational aircraft and offers over 600 daily flights connecting 38 destinations.

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