Mallya to raise $400 million

To consider partial stake sale in Kingfisher Airlines and United Spirits in the next one year.

UB group Chairman Vijay Mallya plans to raise about $400 million in the next one year by diluting his holding in Kingfisher Airlines and United Spirits.

Kingfisher Airlines will float an initial public offer of $200 million, while United Spirits will raise the same amount through either a private placement of equity or an issue of bonds.

"This (the IPO money) will mainly go towards funding the fleet acquisition as well as route expansion," Mallya said in New Delhi today on the sidelines of the India Economic Summit.

Mallya, in his personal capacity, holds all of Kingfisher Airlines' equity. In United Spirits, the promoter holding is close to 56 per cent. The public holds 37.43 per cent, while the rest is with trusts. Kingfisher has placed orders with Airbus Industrie to buy planes including the biggest, Airbus A 380, worth $6 billion.

In the case of United Spirits, he said, "We have a an offer on the table which we are considering... We will look at private placement or a convertible bond issue. At present, we are in the process of consolidating the business of Shaw Wallace and United Breweries."

United Spirits' fund raising is expected to be completed by March 2006. "The airline will tap the capital market in 2006," he said. However, details like the quantum of equity that he would dilute in both the companies is yet to be decided.

Mallya also said that he had made an offer to acquire the entire equity of Air Sahara. "Ernst & Young has put a valuation of $750 million to $1 billion for Air Sahara. My offer is less than that. I am offering a price that I think is value for money," he said.