Jet Airways has announced the details of its IPO. The Jet Airways IPO will be of 1.72 crore shares of Rs 10 each to raise a maximum of up to Rs 1942.50 crore. The fully book-built issue is opening 100 per cent book built issue will open for bids on February 18 and close on February 24.

The price band for the issue has been fixed at Rs. 950 and Rs. 1,125 per share. Of the total offer, Jet Airways is making fresh issue of 1.42 crore equity shares and balance 30.21 lakh shares are an offer for sale by Tail Wings Ltd.

The combined offer constitutes 20 per cent of fully diluted post offer paid up equity capital of the company.

A part of the proceeds of IPO would be used to retire some debt of the company. The company executive director Saroj datta said that the brand and trademarks would be transferred to Jet Airways by Jet Enterprises.

This process of transfer would be done over six months on payment of consideration which would be based on independent valuation by professional agency.

Gunit chadha, head of Deutsche Bank (India), whose investment banking arm is one of the lead managers for issue, said, the pricing for the IPO would be firmed up by February 28 and the listing on the stock exchanges is likely to take place by March 14.

On valuation of Jet Airways' assets, UBS Securities Ltd Managing Director Manisha Girotra said the pricing was based on fair valuation done by comparing with listed airlines abroad like Ryan air and Singapore Airlines.

The valuation for IPO pricing had to be done by comparing it with foreign airlines as none of the airlines are listed on the Indian stock exchanges, Girotra said.

Earlier, two Indian airlines had issued shares and their stocks were listed on stock exchanges. But, these companies later folded their operations.

Out of total offer, 12 lakh shares are reserved for Jet Airways employees. There would be 60 per cent allocation for institutional investors, upto 15 per cent to high net worth individuals and upto 25 per cent to retail investors.

Deutsche Equities India Pvt Ltd, HSBC Securities And Capital Markets (India), UBS Securities India Pvt Ltd, Citigroup Global Markets India, DSP Merrill Lynch Ltd and Kotak Mahindra Capital Company Ltd are book running lead manager for the IPO.

Backgrounder

January 2, 2005

Leading private Indian airline Jet Airways has filed the draft Red Herring Prospectus for an initial public offering (IPO). Through the IPO, Jet Airways plans to sell over 17.2 million shares. Of these, 25% is reserved for small and retail investors. Retails investors, thus, will be eligible for 4.3 million equity shares. The Jet Airways IPO is through the book-building route, whereby the equity share price will be arrived at.
In al, the total number of shares up for sale through the Jet Air IPO amounts to 20% of Jet's ' equity capital. The IPO is set to open in April. Jet Airways plans to raise about Rs 1,500 crore through the IPO.

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Of the 20% of Jet Airways equity to be put up for IPO, 60% will be offered to financial institutions, 15% to non-institutional buyers and 25% to small/retail investors.

Jet Airways is owned by Tail Winds, a company incorporated in Mauritius. Jet has a clean flying history of over 10 years in the domestic skies. According to the recently-revised aviation policy, Jet Airways, along with Sahara, will be able to fly to foreign locations too. The company is chaired by Mr Naresh Goyal.

Of the total Jet Airways shares on offer, 82.5% will be new equity, while the remaining will be a sale by tail Winds. The total share offer will be 20% of the expanded equity capital. Six leading merchant bankers have been short listed to manage the Jet Airways IPO. They are DSP Merrill Lynch, deutsche Bank, Citigroup, HSBC, Kotak Securities and UBS. A total of 12 companies had sought to be merchant banker to the issue.

Jet Airways chairman Naresh Goyal said that the proceeds from the IPO will be used to expand the airline's operations and pay off debt. Domestic air travel has picked up steam significantly in the last few years, with the entry of several players and more readying for take-off. Jet is facing competition from non-frill carriers like Air Deccan and upcoming airlines like GO (promoted by Nusli Wasdia's Bombay Dyeing group), Royal Airways, Indus Air and Yamuna, besides state-run Indian Airlines.

In the past, eyebrows have been raised about the real owners of Tail Winds Ltd. Many companies operating in India are registered in Mauritius, a tax haven. Former disinvestment minister Arun Shourie had once remarked that he doesn't know if Jet Airways is an Indian company or a foreign one. However, the airline has steered clear of any disrepute. Jet Airways has positioned itself on customer service plank, a commodity unheard of when it took to Indian skies in the early 90s. The IPO helps Jet Airways to raise the much needed funds to take on the upcoming competition. Also, the IPO will induce much more transparency into the functioning and accountability of Jet Airways.

BY OUR BUSINESS CORRESPONDENT

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