Rakesh Gangwal and Family Trust Set to Divest 3.4% Stake in Company

InterGlobe Aviation’s co-founder Rakesh Gangwal and his family trust are set to sell up to 3.4% of their stake in IndiGo, India’s largest airline, in a transaction valued at approximately ₹6,831 crore. This move comes amid a gradual reduction of Gangwal’s holdings following a public dispute with co-founder Rahul Bhatia. The sale, which involves the Chinkerpoo Family Trust, is being facilitated by major investment banks and will see shares offered at a discount to the current market price.

Details of the Stake Sale

Rakesh Gangwal and the Chinkerpoo Family Trust plan to offload a combined 1.32 crore equity shares of IndiGo, representing 3.4% of the airline’s total equity. The shares will be offered at a floor price of ₹5,175 each, which is a 4.5% discount compared to IndiGo’s closing price of ₹5,420 on the previous trading day. The total estimated value of the transaction is around $803 million, or ₹6,831 crore. This sale will be executed in multiple tranches on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), and it is important to note that this is a secondary sale with no new equity being issued.

Management of the Transaction

The transaction is being managed by prominent investment banking firms, including Goldman Sachs (India) Securities Pvt Ltd, Morgan Stanley India Company, and JP Morgan India. These firms are acting as placement agents for the sale, ensuring that the process runs smoothly and efficiently. The involvement of these major financial institutions highlights the significance of this stake sale in the Indian aviation sector.

Background of the Stake Reduction

Rakesh Gangwal’s decision to reduce his stake in IndiGo follows a prolonged public dispute with co-founder Rahul Bhatia, primarily over corporate governance issues. This latest sale is part of a series of divestments by Gangwal and his family trust. In August 2024, they sold a 5.24% stake for ₹9,549 crore, and prior to that, they had sold shares in March 2023. The trend of divestment has been ongoing, with significant sales occurring in September 2022 and February 2023 as well.

Future Implications

Under the terms of the sale, a lock-up period of 150 days will apply to the vendors and their immediate relatives. However, there is an exception that allows for the transfer of shares worth at least $300 million to a single investor or group, subject to specific pricing and lock-up conditions. This strategic move by Gangwal and his family trust could have implications for IndiGo’s market dynamics and investor sentiment, as the airline continues to navigate its growth trajectory in a competitive industry.

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