Kingfisher Airlines to raise $150 mn

Kingfisher Airlines, after near two-misses, is finally set to raise $150-200 million through the private equity route during the current quarter. According to industry sources, two global PE funds are expected to come in. This will be Kingfisher's first round of external equity funding.

The company, owned by the UB Group, had been relying on internal group reserves and debt to manage its operations over the past two years and this infusion is expected to fuel its sustained growth. "It's high-time that Kingfisher Airlines get this funding, which will happen during this quarter," a source close to the development said. No official comments were available from UB.

Kingfirsher Airlines, during the second half of 2006, had raised around $80 million in debt in the wake of weak response from various PE funds. Industry sources indicate that Morgan Stanley was the frontrunner to invest which fell apart due to valuation differences. Vijay Mallya himself went overboard during last year stating that he will take this company public during 2006 or 2007, a move which has not materialise so far.

During the quarter ended December 2006, UB Holdings, the holding firm for Kingfisher Airlines, executed guarantees in favour of Banks/Aircraft Leasing Companies aggregating Rs 546 crore on behalf of Kingfisher Airlines taking the total to Rs 1633 crore cumulatively excluding, performance guarantees.

"Its imperative that all these airlines in India get adequate funding to sustain operations. It is getting pretty difficult for them given the competition these airlines are operating in India," the source added.

Its not only Kingfisher Airlines, but also Air Deccan and Jet Airways who are in the market to raise substantial private equity against all odds.

Kingfisher Airlines willget a shot in the arm for its fleet expansion exercise which is expected to touch 45 by end-2007 from the current 27.

During a period of one year from January 2006, Kingfisher Airlines has managed to increase its marketshare to 10 per cent from 7.6 per cent.

The turnover of the company is estimated to be in the vicinity of Rs 1,500 crore with losses over Rs 300 crore.