Pvt equity funds see Paramount a top draw

Coimbatore-based low-cost carrier Paramount Airways is catching the fancy of private equity funds. A slew of funds, including UTI Venture Fund, the India Growth Fund (IGF) of the Kotak group and the New York-based Venrion, is looking for a stake in Paramount.

Bennett, Coleman & Company Ltd (BCCL), the publisher of the Times of India and Economic Times, has also been looking for a small stake in the airline.

Sources close to the development said Paramount, estimated to be valued at around $100 million, might dilute a 10 per stake to private equity funds.

Paramount needs capital to finance its $525-million expansion plan. It has announced an expansion plan for the acquisition of 15 aircraft, including the Embraer 170, the Embraer 175 and the Embraer 195.

Paramount Airways Managing Director M Thiagarajan declined to comment on this. But Kotak Mahindra Bank and BCCL executives confirmed separately that there had been talks for picking up small stakes in the airline.

"As the aviation industry is booming, private equity funds and investment houses are keen on acquiring stakes in no-frills carriers," an industry analyst said.

Paramount Airways is promoted by a Madurai-based industrial house. Based at Coimbatore, the airline is operating daily flights to destinations including Coimbatore, Chennai, Delhi and Kochi, using its new-generation Embraer 170/190 aircraft. It launched commercial flights on October 19.