India’s budget airline, Akasa Air, could raise extra money for its future business growth. In response to a recent report, the airline is trying to sell equity for a round of fundraising. Akasa has ambitious fleet and network expansion plans, including starting international operations this 12 months.
Capital for growth
Akasa Air is possibly trying to raise funds for its next growth phase. In response to a report by The Economic Times (ET), the airline is taken with raising around $75-100 million by diluting its equity share structure.
While the airline has not made any official statement regarding this, people aware of the matter have told ET that Akasa has contacted potential investors akin to PE firms and individuals with high net price. The report also notes that the fundraising relies on a $650 million valuation for the low-cost carrier.
Photo: Akasa Air
The airline began operations in August last 12 months with an initial order of 72 Boeing 737 MAX aircraft. It was backed by the late ace investor Rakesh Jhunjuhnwala who invested $35 million within the airline. It has received 19 planes up to now and would reportedly use the fresh capital to make pre-delivery payments for future deliveries.
Stake dilution
An investment that big would mean some stake dilution throughout the airline. Mr Jhunjhunwala passed away last 12 months, but his family still holds around 46% stake within the airline through a trust. US-based hedge fund PAR Capital Management also has a couple of 6% stake.
It’s assumed that the brand new fundraising could dilute the stake of the Jhunjhunwala family, although the extent of dilution is unclear. The family, nonetheless, may have the suitable of first refusal regarding any fundraising round. A source told ET,
Photo: Akasa Air
Big plans
Akasa Air has launched into an ambitious expansion plan and already has a major presence across the country (including all metro cities) in lower than a 12 months since starting operations. The carrier signed a cope with Boeing for 72 737 MAX planes and picked up quite a couple of white tail aircraft (planes that weren’t taken up by the shopper).
A couple of months ago, Akasa’s Chief Executive Officer Vinay Dube said that the airline could place one other aircraft order this 12 months, something much larger than the primary one. At a press conference, he said,
Photo: Akasa Air
In response to the newest data by the Indian regulator, the DGCA, Akasa’s domestic market share is 4%. It will likely increase because the carrier continues to expand and take more aircraft deliveries.
While its focus stays on tier-2 and -3 cities within the country, Akasa may also likely launch international flights as soon because it reaches a fleet size of 20 airplanes towards the top of this 12 months, quite possibly to the Middle East.
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