Air Deccan appoints 3 banks for IPO

Low-cost airline Air Deccan has appointed three investment banks to advise the company on its initial public offer and a final decision on the matter would be taken in the next couple of months, Capt. G R Gopinath, managing director said in Chennai.

"Three top investment banks have been asked to work on the IPO details. We will have a complete picture in the next two months," he said.

The IPO proceeds would be used partly to finance its recently placed orders for 32 Airbus and 30 small aircraft at a cost of about $1.9 billion.

The new aircraft would help Air Deccan meet its target of 600 flights per day by the end of five years from the present 115 flights per day, Gopinath said.

He said the company would have to dilute its equity for finance its recent flight acquisitions. Air Deccan, which has recently raised $50 million from private equity funds Capital International and ICICI Venture Fund, would also resort to subordinate debt, loans from financial institutions and Exim Bank guarantee to finance the aircraft purchases.

The Air Deccan's IPO, which would be the second one by a private airline company in India after Jet Airways, would focus on the high growth rate of the domestic airline sector.

He said Air Deccan, which posted about Rs 1 crore (Rs 10 million) profit last year on a sales turnover of Rs 350 crore (Rs 3.5 billion), would achieve a turnover of over Rs 1000 crore (Rs 10 billion) this year. This would be a credible achievement of a company, considering that "this is only our second full year of operations," he said.