Malvinder Singh-owned co is likely to pick up a majority stake in the budget airline, could offer Rs70-75 per share.
Even as its talks with media baron Kalanithi Maran were stuck in a limbo due to differences in pricing, promoters of budget airline SpiceJet Ltd — London-based Bhupendra Kansagra and family, Ajay Singh and others — are flying closer to Religare Voyages Ltd (RVL) and may soon finalise a deal.
According to sources in the no-frills airline, who did not want to be named, the Malvinder Singh-operated air charter and travel business company is close to picking up stake in SpiceJet.
“Religare will soon buy stake in Spicejet. They (promoters and Religare) are moving towards deal,” said the source.
The source, however, could not give details on the value or contours of the deal that is being worked between the two parties. Religare is likely to go in for an open offer after it acquires the SpiceJet promoters’ stake.
The SpiceJet promoters and Religare Voyages have been in talks for some time now.
The last offer made by owner Sun Network was at around Rs 60-63 per share for a 51% stake; that was not acceptable to the SpiceJet promoters. Sources said Religare’s price could be between Rs 70 and Rs 75 per share.
On Monday, the low-cost airline’s share closed at Rs 57.90.
Ajay Singh, director of SpiceJet Ltd, in an interview to a television channel last week, had said promoters currently own around 30% stake in the airline.
However, the shareholding pattern on BSE website shows that as on December 2009, promoter’s held 12.89%, foreign institutional investors (FIIs) 9.35%, domestic institutional investor 12.84% and others 64.92%.
A Religare spokesperson refused to confirm the deal. “While we at RVL do keenly look at organic and inorganic growth opportunities from time to time, we do not wish to comment on matters such as this which are speculative in nature,” the spokesperson said.
Singh did not respond to calls by the DNA.
A senior executive with a foreign financial services company, who did not want to be named, said Religare could be a likely candidate for buying out the airline as it has the liquidity and has been aggressively diversifying into business after selling its stake in Ranbaxy.
“Since SpiceJet is a well run company, they (Religare) would want to come in with a controlling stake. However, my sense, is that they may not put a huge premium on share price,” he said.
Also, he does not expect US-based billionaire investor Wilbur Ross, who has invested in the airline by buying the foreign currency convertible bonds (FCCBs) worth $80 million, to cash out at this point in time.
“He (Ross) will not capitalise his investment now because there is more value to be made,” he said.
Ross’ FCCBs will come up for conversion into equity in December this year, which will translate into 30% stake in the airline.
If Religare buys out the promoter’s stake in SpiceJet, it would be the latest in a series of inorganic acquisitions by the Singh brothers who sold 34.8% stake in pharma company Ranbaxy to Daiichi Sankyo for Rs 10,000 crore.
Their acquisitions have spanned healthcare, broking and asset management. They began in 2008 with the acquisition of 97.76 % stake in Hichens Harrison for $110 million (Rs 50 crore), which was later renamed Religare Capital. Later in the same year, a Religare promoted mutual fund acquired Lotus AMC, a mutual fund which managed over Rs 5,000 crore.
In 2009, Fortis Healthcare, also promoted by the Singh brothers, announced its purchase of 10 hospitals from Wockhardt for Rs 909 crore.
In February 2010, Religare in February signed a deal to pick up a majority stake in Northgate Capital, a private equity firm for an undisclosed amount.
Also in March, Religare Technova acquired the healthcare solutions business of Bangalore-based Sobha Renaissance Information Technology Pvt Ltd (SRIT). Religare Enterprises in March 2010 also announced the hiring of a team from KBC Financial Products, Japan and applied for the necessary regulatory permissions as a prelude to starting a dedicated asset management, sales and distribution platform in Japan.
— With Sachin P Mampatta in Mumbai
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