The Hindu Business Line : Air Deccan IPO not now

Deccan Aviation, which runs the low cost airline, Air Deccan is learnt to have put off its IPO by a couple of months even as anchor investors have shown interest in taking up position as QIBs in the run up to the public offering.

Merchant banking sources told Business Line that Air Deccan promoters have been advised by its bankers to float its IPO only after the fiscal year (2005-06) comes to a close. Hence, Air Deccan might now look at either late April or May to float its IPO. In another development, anchor investors are understood to have approached the promoters of the airline to take up position as QIBs (qualified institutional buyers) in the run up to the IPO.

Merchant banking sources also said that the price band for the IPO could be in the range of Rs 300 to Rs 350. This will give the airline a valuation of around $750 million. Air Deccan Managing Director, Capt G.R. Gopinath, holds over 20 per cent stake in the airline, which should give his stock a valuation of around $150 million.

Air Deccan has already filed Red Herring prospectus with SEBI and has been in talks with merchant bankers to fix the date for floating the IPO as well the price band. The prospectus says that Deccan Aviation is going public to raise funds for setting up a training centre worth Rs 65 crore and a hangar which will cost Rs 40 crore. It will also require around Rs 17 crore for setting up infrastructure at various airports and will require around Rs 133 crore for debt repayment. For marketing development, it has earmarked around Rs 45 crore.

Air Deccan was the first airline in the country to come out with a low cost model and sells some of its tickets for as low as Re 1. It has 30 aircraft in its fleet, including 19 turbo props and 11 Airbus A320s. It touches 53 airports in the country and in 2005 flew a million passengers. This year, it plans to fly over 3 million passengers, which works out to 15 per cent of the total number of airline passengers. Its cost per seat km is around Rs 2.8 which is the lowest among all domestic airlines in the country.