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IndiGo's plan to raise ₹3,000 crore via Qualified institutional placement (QIP) has hit an air pocket.
Sources said that given the current covid-19 pandemic situation , the airline is finding it difficult to raise funds from Middle Eastern players. Hence, it may have decided to extend the time-frame or even rethink the plan.
A banking source told BusinessLine that IndiGo has been trying hard to raise funds through the QIP in the past three months.
“IndiGo was looking at Middle Eastern players, however, due to the impact of the pandemic on the aviation sector, the potential investors are cagey about putting money into the company at this time,” said a top placed source.
In May, IndiGo had got approval from its board with the internal deadline to raise funds, according to sources, is August 31.
Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of southern Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).
Another source, said that the company is weighing all options. It is waiting it out for the next few weeks to see how the third wave pans out before making another plan to raise funds or to extend the timeline for the QIP.
Till then, IndiGo has been selling and leasing back its aircraft. Each sale is giving the airline a profit of at least $2-4 million.
In January , IndiGo had shelved its plans to raise funds up to ₹4,000 crore through a QIP. However, it instead opted to raise money through sale and lease back (SLB) transactions and other alternative options.
The airline reported its highest-ever quarterly loss of ₹3,180.2 crore in the April-to-June period. It has been a carrier with the strongest balance sheet however, the second wave has made it extremely turbulent for the airline, too.
As of June 30, 2021, IndiGo had free cash of ₹5,602.7 crore, which is 7.5 per cent lower than the same period last year. Its debt levels plummeted from ₹23,551.6 crore in June 2020 to ₹31,690.1 crore, a rise of 34.6 per cent.
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