Budget airline IndiGo’s IPO delayed as SEBI seeks fresh clarifications

IndiGo BannerCapital market regulator the Securities and Exchange Board of India (SEBI) wants more insights into the initial public offering (IPO) of InterGlobe Aviation – the company behind India’s leading budget carrier IndiGo. InterGlobe Aviation filed draft red herring prospectus with SEBI in June for raising INR2,500 crore through the maiden public offer. The global coordinator and book running lead managers of the issue are Citigroup Global Markets India, JP Morgan India and Morgan Stanley India Company Private Limited. The Book Running Lead Managers to the issue are Barclays Bank, Kotak Mahindra Capital Company and UBS Securities India.

Read Also: IndiGo parent files prospectus for INR2,500 crore IPO

In the latest update on its website, the regulator said it has asked lead manager of the IPO to furnish more details. The regulator did not disclose what additional details it is looking for. SEBI will issue next update in this matter on Monday, 10 August. This is the second time SEBI is seeking clarifications for the IPO. The regulator earlier sought clarifications last month.

The IPO, a first for the aviation sector in several years, is eagerly awaited as IndiGo is a consistent performer in what is described by analyst as a tricky industry. The gravity of the issue can be gauged by the fact that IndiGo is one of the two profit-making airlines in India besides Wadia Group-promoted GoAir. While Kingfisher Airlines’ troubles are well documented, SpiceJet has got a fresh lease of life but only after receiving fresh capital infusion. Jet Airways has seen substantial improvement in its operations lately but still remains in red.

The IPO will include issue of fresh shares worth INR1,272 crore while existing investors Interglobe Enterprises Limited, Rahul Bhatia, and Rakesh Gangwal plan to sell combined 3.01 crore shares. The company is reportedly considering acquiring some long-haul aircrafts to service destinations in North and South America, Europe, Australia and Africa among others. The strategy is aimed at leveraging its healthy balance sheet and profitable operations to gain entry in international routes as and when domestic carriers are allowed to do go by the regulator.

Faster responses from SEBI

The market regulator generally offers its final observations within 30 days after receiving satisfactory reply from the lead merchant banker. SEBI has streamlined its clearance process this year and now it takes fewer days to clear IPOs. According to data compiled by IPO Central, SEBI took an average of 97 days in approving 21 IPO applications in the first six months of 2015. This is a substantial improvement from the average of 248.8 days, including weekends and holidays, it took to clear the 5 IPO applications in the first-half of 2014. In the latest period, the fastest approval came for Syngene International in just 51 days while the application of SMC Global Securities remained in the process for 170 days, taking the maximum time.

Read Also: India’s IPO rush – 7 listings, 21 approvals in H1 2015

Krishna Bagra

Coming from a family of investors and financial analysts, Krishna learnt wading through regulatory filings pretty early in her career. At IPO Central, Krishna plays twin roles of contributor and head of research desk. She can also be reached at +krishnabagra .

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