Bankers appointed for INR2,500 crore GoAir public offer

Wadia group promoted GoAir has mandated Kotak Mahindra Capital and Axis Capital to handle its upcoming IPO. GoAir public offer is expected to raise not less than INR2,500 crore (INR25 billion) by issuing new shares and there will be no Offer For Sale (OFS) from the Wadia family. According to sources, the IPO will be launched within the current fiscal year.

In comparison to other industry players, GoAir has a small fleet of 19 Airbus A320 and three A320 neo aircrafts. However, it has placed a large order of 142 A320 neo caircrafts with Airbus which is yet to result in deliveries. Currently a domestic player, the company plans to expand into underpenetrated routes in Central Asia, the Gulf, China and Vietnam. Despite its small size, GoAir is profitable as it seldom gets into price wars. Aviation consultant CAPA estimates the airline earned around INR130 crore in FY2016. According to the Directorate General of Civil Aviation (DGCA), GoAir enjoyed a passenger load factor of 84.8% in March.

GoAir public offer to follow IndiGo

GoAir IPO is a regular buzz on the markets but appointment of lead managers this time is a strong indication that the company may list soon. Positive sentiment around IPOs as well as secondary market is likely to help listing of GoAir IPO. The airline will follow InterGlobe Aviation IPO which raised INR30 billion in 2015 and rewarded offer investors in a handsome way. As a result, GoAir public offer will be closely watched.

Airline business is traditionally seen as a wealth destroyer globally but the situation has improved in recent years with longtime naysayer Warren Buffett also taking a positive view of the industry. In the domestic market, a slew of factors such as low fuel prices and high competition has kept prices competitive, leading to a steady growth in traffic.