IndiGo raises $128m ahead of IPO; Singapore’s GIC, Goldman Sachs, BlackRock, Fidelity among anchor investors

Indigo posted a record profit last year and is expected to post $250 million in profit this financial year too

InterGlobe Aviation Ltd, owner of India’s most profitable airline IndiGo, on Monday received demand for around eight times the shares it offered to so-called anchor investors, including domestic and foreign institutions, a day before the start of a keenly watched initial public offering (IPO).

The company raised Rs.832 crore ($128 million) via the anchor investor allocation, also known as the anchor book, selling shares atRs.765 apiece, the upper end of the Rs.700-765 price band. The company used its discretion to lower the amount on offer from around Rs.1,000 crore.

The anchor book is that portion of the IPO bankers can allot to institutional investors on a discretionary basis. Anchor-book subscription opens a day before the launch of an IPO and acts as an indicator of institutional investor interest.

Subscribers to the anchor book include investors such as Harvard University Endowment Fund, Goldman Sachs Group Inc., Ruane Cunniff & Goldfarb Inc., Fidelity Investments, BlackRock Inc., Dutch pension fund APG and GIC Pte. Ltd, Singapore’s sovereign wealth fund. Domestic investors include HDFC Mutual Fund and Sundaram Mutual Fund.

“The anchor book for IndiGo witnessed a very strong demand of eight times the book size, especially from foreign institutional investors, which have subscribed to a majority of the book,” a person aware of the details of the sale said on condition of anonymity.

“This is one of the largest anchor books for an Indian IPO and over 40 investors have subscribed to it. The demand for the main IPO book, which opens tomorrow, is also significantly strong and given the names of the anchor investors, retail investors too would be attracted to the issue,” the person added.

InterGlobe is seeking to raise Rs.3,000 crore from the IPO, including the anchor book, in a test of investor demand for IPOs by consumer-facing companies. Earlier this month, Coffee Day Enterprises Ltd, which runs India’s largest cafe chain Café Coffee Day, received investor orders for 1.8 times the stock it offered in a Rs.1,150 crore IPO.

The three-day public issue by InterGlobe will close on 29 October. The company, founded by Rakesh Gangwal and Rahul Bhatia, is seeking a pre-money equity valuation of about Rs.24,059 crore at the lower end of the price band andRs.26,293 crore at the higher end.

Bankers to the IndiGo public issue are Citigroup Global Markets India Pvt. Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India Co. Pvt. Ltd. The other bankers to the issue are Barclays Bank Plc., Kotak Mahindra Capital Co. Ltd and UBS Securities India Pvt. Ltd.

InterGlobe Aviation posted a record Rs.640.43 crore in quarterly profit for the three months ended 30 June. The airline notched up the profit on revenue of Rs.4,317.19 crore for the quarter, according to share sale documents filed with market regulator Securities and Exchange Board of India, which didn’t disclose profit and revenue for the year-ago period.

The airline reported earnings before interest, tax, depreciation, amortization and rentals (Ebitdar) of Rs.1,577 crore, with an Ebitdar margin of 37%.

In September, IndiGo reported a record net profit of Rs.1,304 crore for the year ended 31 March—a fourfold jump over the previous year—as it benefited from higher passenger traffic and lower jet fuel costs ahead of the share sale. The company’s revenue rose 25% to Rs.14,320 crore in 2014-15 from Rs.11,447 crore in the previous year.

India has the fastest growing domestic aviation market in the world, ahead of China and the US. The country’s domestic air passenger traffic soared 20.2% in the eight months ended 31 August compared with the year-ago period, according to the International Air Transport Association, owing to more flights, fare cuts and faster economic growth.

India is also one of the most under-penetrated aviation markets in the world, with around 350 aircraft for domestic service, which is half the size of Southwest Airlines Co. of the US.

IndiGo had total debt of Rs.3,912 crore as of 31 August, all of which was aircraft-related. A portion of the IPO proceeds will be used to reduce this debt.

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.