Having sealed a stake-sale deal with Toronto-based Fairbridge Capital, Thomas Cook India Managing Director Madhavan Menon says the company is re-energised to review all growth options, both organic and inorganic. Still in London, fixing the nuts and bolts of the deal that will see the UK-based Thomas Cook Group Plc selling its entire 77.1% stake in the Indian firm to Fairbridge, Menon speaks to Ruchika Chitravanshi in a telephonic conversation. Edited excerpts:
Is delisting of Thomas Cook India on the cards?
First is the open offer, which we have to determine and understand as to what the response will be. Then we have two regulations. The RBI (Reserve Bank of India) regulation talks of maximum holding of 75 per cent and Sebi (Securities and Exchange Board of India) talks of delisting. Both these are fairly complex, and therefore, it is difficult to say at this point whether delisting will happen or not. Neither Fairbridge nor I have had any discussion on delisting. It is not a priority. Our primary focus is to get the open offer on the roll. We need to look at how Thomas Cook operates and review our strategies. Delisting is some time away.
Apart from the bid amount, what were the other reasons for choosing Fairbridge?
We looked at a variety of criteria – credentials, reputation and terms and conditions quoted around the brand. We looked at whether they were long-term investors or private equity (PE) investors. Finally, Fairbridge shared a lot of our values. They have looked at this deal as a strategic, long-term investment.
PEs tend to get lost in details. Fairbridge has overcome competition from some of the biggest PEs.
There is a buzz that Fairbridge is likely to retain the business for just a couple of years. How much time are you giving them?
That is not correct. They are long-term investors. The Fairfax group (the holding group of Fairbridge) has never disinvested in a company that it has bought. I do not know where this is coming from.
At what point in the auction process did Fairbridge come into the picture?
They were there from the beginning and were one of the most serious bidders.
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Since you are spearheading the India business, is your job role going to change?
I would continue as the managing director of the company.
By when will the new company have representation on the board?
It has to get the shareholders' approval. All the process will take around four weeks. It should be in place by the beginning of July. Also, we are ahead of schedule, having signed the deal 10 days before we thought we would finalise it.
How are your synergies with Thomas Cook Group going to be affected?
We had very little dependence on the parent company, simply because our business models were vastly different from each other. They were only giving us 0.5 per cent of the total revenue. So, it will be business as usual.
Is there a possibility for the parent company buying back its share, as had happened in 2008 in the case of Dubai Financial?
I have not even given this a thought, but, you cannot compare Fairbridge with Dubai Financial. Dubai Financial was not sure of its identity.
Now with the deal in place, what is next on your agenda for Thomas Cook India?
The priority would be to give new shareholders abundant comfort about what Thomas Cook is all about. We will now sit down and review all the options . We would want to grow the leisure business. We will look at the acquisitions and review both inorganic and organic growth. There are a variety of options.
How are things going to change for Thomas Cook India now vis-à-vis competition?
All I can say is that better watch out the competition as Thomas Cook is re-energised now.