The Tatas and the Dubai-based Istithmar Group may increase their stake in Delhi-based low-cost carrier SpiceJet, which has a 10 per cent market share in Indian aviation market.
While the Tatas, who currently hold 7 per cent stake in the company through Ewart Investment, may hike their shareholding to 15 per cent, Istithmar is likely to raise its stake from 13 to 30 per cent, sources said.
The increase in stake, industry sources said, would lead to enough capital infusion to fund aircraft acquisitions that SpiceJet was planning. Company chairman Siddhanta Sharma had recently announced the firm wanted to raise around $100 million to fund the purchases.
"Both companies have told us that they will support the airline. This obviously means increasing their stake in the company and infusing capital into it," said a senior SpiceJet executive.
According to sources close to the development, the Tatas and Istithmar had expressed their interest to hike stake in SpiceJet at a shareholders' meeting last month.
Company sources said that the Tatas are looking at inducting additional equity into the company, resulting in an additional capital inflow of around Rs 110 crore. On the other hand, Istithmar has Foreign Currency Convertible Bonds worth $80 million which it may convert to increase its stake.
Along with the $30 million worth of interest accrued since December 2005 when the bonds were issued, encashing these FCCBs now would lead to a capital inflow of $110 million.
In a recent conversation with Business Standard, SpiceJet's UK-based promoter-director Bhupendra Kansagara had said that their family was willing to sell their 12.91 per cent in the airline if they got right valuations.
According to industry sources, many airlines, including Jet Airways and Kingfisher, have been looking at mergers with SpiceJet.
Declining to comment on the other airlines' intentions, a senior SpiceJet executive said that the Kansagaras might not sell their stake at the moment.
The airline had been trying to get hedge funds, such as Texas Pacific Group, to invest in it for two years now, but had got no commitments. TPG had said it wanted to invest in the Indian aviation market but would wait and watch for another phase of consolidation.
