Ajay Singh Plans to Sell Over 10% Stake in SpiceJet

Ajay Singh, SpiceJet’s co-founder, chairman, and managing director, is reportedly planning to sell more than 10% of his stake in the cash-strapped airline.

According to the Economic Times, this strategic move aims to raise approximately ₹3,000 crore, although this information has not been independently verified.

Current Financial Struggles of SpiceJet:

SpiceJet has been facing significant financial challenges, with its market share dropping below 4% and only 22 operational aircraft.

Over 30 planes are grounded due to the unavailability of engines and spare parts. The airline’s total liabilities are around ₹9,000 crore, including ₹2,700 crore owed to aircraft lessors.

Reasons Behind the Stake Sale:

• Immediate Need for Capital: The stake sale primarily aims to raise fresh capital for the airline. SpiceJet urgently needs funds, but previous fundraising efforts have not been successful.
• Debt and Liabilities: The airline has defaulted on payments to vendors, including aircraft lessors, some of whom have filed court petitions to declare the airline bankrupt. The significant liabilities have added pressure on the airline to secure new funding.
• Previous Fundraising Challenges: SpiceJet had earlier planned to raise ₹2,250 crore from a group of 64 investors but was only able to raise ₹1,060 crore due to one primary investor backing out.

Impact on Ajay Singh Stake:

After the sale, Ajay Singh’s stake in SpiceJet is expected to decrease to 30-35%, down from the current 47.8% he and his family hold.

Notably, 38.8% of this stake is pledged to lenders. ICICI Securities and JM Financial have been appointed to manage the fundraising process.