Global investment banking and securities firm Goldman Sachs has expressed interest in acquiring equity in Delhi-based SpiceJet even as top sources said talks for a merger with Kingfisher Airlines are on track.
Meanwhile, Wilbur Ross, who controls funds that buy troubled companies and turn them around, confirmed to a TV channel that talks with SpiceJet were on for a stake. SpiceJet sources said they might also approach domestic equity funds to raise capital for the company.
"We are looking at various options and things will be clearer in a week to 10 days. A merger or a standalone funding or a combination of both is still very much on the cards," said Siddhant Sharma, CEO, SpiceJet. He, however, declined to discuss details of the negotiations.
For Ross and Goldman Sachs, which holds convertible bonds in the airline, the current foreign direct investment limit of 49 per cent in civil aviation could emerge as a key issue.
SpiceJet currently has foreign holdings of 38.35 per cent, leaving scope for Ross or Goldman Sachs to acquire a little less than 10 per cent. This would make Ross the third largest shareholder after the Dubai investment firm, Ishtitmar (over 13 per cent), and London-based Bhupendra Kansagra (12.91 per cent).
Neither firm, therefore, will have a controlling position. Regulatory hurdles will remain even if SpiceJet issues fresh equity diluting the promoters' stake, unless the valuations are too high, which seem unlikely in the current market, said experts.
"There are regulatory issues involved. We are a listed company and there is a board of directors that is responsible to the shareholders," said London-based promoter director Bhupendra Kansagra.
Given this, the airline-appointed merchant bankers Rothschild may consider talks with domestic investors since they will be outside the purview of the FDI limit.
SpiceJet, which has over 10 per cent market share, is looking at an investment of at least $100 million, to stay afloat and also to fund fleet expansion.
