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Business News/ Companies / News/  IndiGo's board approves raising 3,000 crore through QIP
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IndiGo's board approves raising ₹3,000 crore through QIP

QIPs are a way to issue shares to the public without going through standard regulatory compliance

FILE PHOTO: An IndiGo Airlines Airbus A320 aircraft. (REUTERS)Premium
FILE PHOTO: An IndiGo Airlines Airbus A320 aircraft. (REUTERS)

NEW DELHI : The board of directors of InterGlobe Aviation Limited, which operates the country's largest domestic airline IndiGo has approved raising upto 3,000 crore through a Qualified Institutions Placement (QIP) process, the company said in a stock exchange notification on Monday.

"...the Board of Directors of InterGlobe Aviation Limited (the "Company"), at its meeting held today, i.e., May 10, 2021, has approved the raising of funds for an aggregate amount not exceeding INR 3,000 Crores (Indian Rupees Three Thousand Crores) through an issue of equity shares by way of a Qualified Institutions Placement," the company said adding that this is however subject to shareholder and other regulatory approvals.

InterGlobe Aviation Limited's board had earlier on 7 May met to consider raising funds through a QIP process.

It was then decided that the airline should continue to explore all options to increase its liquidity, including by way of a QIP, the company said in a stock exchange notification last week.

QIPs are a way to issue shares to the public without going through standard regulatory compliance.

Interestingly, IndiGo had earlier in January shelved plans to raise funds up to 4,000 crore through a qualified institutional placement (QIP), opting instead to raise money through sale and lease back (SLB) transactions and other alternative options.

The airline has since then carried out SLB of a few of its aircraft.

SLB is a transaction in which the owner sells the aircraft, and then takes it back on lease from the buyer. Such a deal typically removes the aircraft, and its associated debt, from the carrier’s balance sheet.

The latest decision by IndiGo's board of directors comes at a time when airlines are struggling with a declining passenger demand due to an unabated rise in fresh covid cases across the country.

Fewer Indians took to the skies for the sixth week in a row for the week to 8 May.

The average number of daily fliers stood at 82,000 for the week ended 8 May, down from 126,000 for the week earlier, according to a report by ICICI Securities.

Meanwhile, the second wave of infections, which has brought the country’s healthcare system to its knees, could precipitate a collapse of the domestic aviation sector, aviation consultancy firm Capa India said in a report last week.

IndiGo will be the only carrier to emerge from the crisis significantly stronger because of its very strong balance sheet, the report said.

However, despite being better placed to withstand the latest downturn in traffic, IndiGo will also feel a very significant impact, it added.

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ABOUT THE AUTHOR
Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 10 May 2021, 07:42 PM IST
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