INVC NEWS
Mumbai : The Indian aviation giant, SpiceJet, grappling with financial challenges amidst the ongoing cash crunch, has devised a novel strategy to overcome its cash woes. The company’s board has greenlit a plan to raise a fresh capital infusion of INR 2,250 crores through the issuance of shares. Notably, this move involves the participation of 64 investors, a mix of financial institutions, foreign institutional investors, affluent individuals, and private investors.
The Financial Landscape
SpiceJet, a prominent player in the aviation sector, has been navigating through a series of financial hurdles in recent quarters. The company reported a consolidated net loss of INR 449.04 crores in the second quarter, marking a 46% reduction compared to the same period last year. The airline attributes this downturn to the unprecedented challenges faced by the aviation industry from July to September, primarily driven by the rapid surge in fuel prices.
The Funding Plan
To alleviate its financial strain, SpiceJet plans to issue 32 crore shares and 13 crore warrants to the identified investors. The issue price is set at INR 50 per share/warrant. The roster of investors includes renowned entities such as Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, and Resurgence Opportunities Fund.
Chairman’s Perspective
Ajay Singh, Chairman, and Managing Director of SpiceJet, expressed optimism about the impact of this capital injection. According to Singh, this move is poised to fortify the company’s financial position, reduce debt burdens, and enhance operational capabilities. He acknowledged the formidable challenges faced by the aviation industry due to the soaring fuel prices and sees this strategic fundraising as a crucial step in mitigating those challenges.
Market Evaluation
As of the market closure today, SpiceJet’s market capitalization stands at INR 3,917 crores. Singh and entities associated with him collectively hold a 56.53% stake in the airline. It remains to be seen how the introduction of new investors through share/warrant issuance will reshape the ownership landscape, given SpiceJet’s history of employing diverse fundraising methods.
SpiceJet’s innovative approach to financial revival
In conclusion, SpiceJet’s innovative approach to financial revival through share issuance marks a significant development in the Indian aviation sector. The company’s proactive measures to attract a diverse set of investors and address its financial vulnerabilities reflect a commitment to sustained growth and stability.
