Amid pilot turmoil, Akasa Air mulling raising up to $400 million

The fundraising plan could involve fresh equity issuances of $75-100 million each and is set to be carried out over the next 12-18 months

Akasa Air, the latest entrant in the Indian civil aviation sector, is considering plans to raise as much as $400 million, according to a report by Mint. This valuation puts the carrier at $1 billion.

Sources were quoted by Mint as saying that the move could lead to a dilution of the stake held by the family of the late billionaire investor Rakesh Jhunjhunwala.

The Jhunjhunwala family owns 45.97 per cent of Akasa Air. One of the sources stated that the fundraising will be executed in multiple tranches, with the valuation increasing up to $1 billion. The Jhunjhunwala family is not likely to buy any additional shares in the planned fresh equity issuances, which may dilute their holding, the source added.

 

UBS Group AG is set to manage the fundraising plan. The plan could involve fresh equity issuances of $75-100 million each and is expected to be carried out over the next 12 to 18 months.

The airline is facing challenging circumstances, as over 40 of its more than 450 pilots have recently quit Akasa without serving their notice. This has led to cancellations of around 18 per cent of the 3,500 flights the airline usually operates a month in August. Akasa is suing some of the pilots for alleged contractual violations and has warned in court that it may have to shut down if the exits continue.

A spokesperson for Akasa Air told Mint that the airline has "strong finances and a solid growth plan." The spokesperson did not comment on the company's fundraising plan or the potential dilution of the Jhunjhunwala family's stake.

The airline is confident about its future and continues to invest prudently. "We are proud that we are adding to the company reserves even in the first year of our operations," the spokesperson added.

Akasa Air's co-founder and chief executive, Vinay Dube, owns a 16.13 per cent stake in the airline. The Jhunjhunwala family has a right of first refusal on any equity fundraising that Akasa proposes. If existing shareholders, including the Jhunjhunwala family, do not participate in an equity issuance, their ownership will be diluted.

A spokesperson for the Jhunjhunwala family told Mint that the family has the utmost faith in the professional management of Akasa and will continue to remain invested for the long term.