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Ashwini Phadnis

New Delhi, July 8 Whether the Vijay Mallya-led Kingfisher or the US-based investment fund W.L. Ross would be the preferred investor in the low cost airline SpiceJet is expected to become clearer in the next few days.

Sources told Business Line that the investor banker Rotschild is to make a presentation to the SpiceJet Board either by the end of this week or early next on the pros and cons of taking on board one or the other investor. In May this year, SpiceJet appointed Rotschild to scout for investors..

At the moment there are several issues hanging, including whether taking $ 100 million from W.L. Ross will not involve having to make an open offer as it would be more than 15 per cent of the paid up capital of the airline. If the US investor decides not to take more than 15 per cent stake, then the maximum investment that it will be able to make will be in the region of $ 60-65 million. The other issue which the board will also have to consider is whether taking on the entire $ 100 million from Ross will not breach the 49 per cent ceiling on Foreign Direct Investment allowed in the domestic aviation sector.

As regards investment from Kingfisher, sources said while there were possibilities of synergies between the two airlines, no formal talks had taken place between the two Besides, the preferred investor or investors will have to be approved by the major shareholders in SpiceJet, including the private equity arm of the Dubai government, Istithmar. The other prominent shareholders include Mr Ajay Singh and Mr Bhupendra Kansagara.

SpiceJet reported a loss of Rs 133.5 crore during 2007-08 as against a net loss of Rs 72 crore reported during the previous year.

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