Kalanithi Maran-promoted SpiceJet is looking at raising funds from investors including private equity (PE) firm Bravia Capital. The airline is in talks with Bravia Capital and some others, according to a report in The Wall Street Journal, quoting Dow Jones Newswires.
The company, however, has not finalised any investor yet and the size of the fund to be raised, added the report, quoting SpiceJet CEO Neil Raymond Mills. The company has always said that it would raise funds if it gets a good deal, said Mills. SpiceJet is looking at buying more aircraft and the funds would be used for purchasing new aircraft. In September 2012, Bravia Capital came up with a whitepaper on the challenges and opportunities of airlines business in India.
The PE firm, in its whitepaper titled "The Current State of Indian Aviation - What Indian airlines need to do to get back in the black" released in September 2012, said: "The majority of airlines assets are stressed, which present an opportunity to enter this market at the right entry point (ie acquiring asset at attractive prices)."
The whitepaper discussed the various challenges faced by the airline sector in India, including the regulatory and business challenges. It mentioned roadmap initiatives which, if implemented, would improve the returns further. "Such an investment strategy could lead to potential returns, which are quite satisfactory," the whitepaper noted.
Recapitalising and restructuring a company could significantly reduce financing costs to support returns. Additionally, it would be necessary to implement a well-conceived plan to ensure overall operating performance improves, the whitepaper said.