Mumbai-based couple acquires 19% stake in SpiceJet for Rs. 1,100cr
Mumbai-based entrepreneur Harihara Mahapatra and his wife Preeti will acquire a 19% stake in budget airline SpiceJet, investing Rs. 1,100 crore. This makes the couple the largest investors in the airline's latest fundraising effort, as SpiceJet is also considering purchasing Wadia-group-owned GoFirst. Shareholders have been asked to vote on a proposal to raise Rs. 2,254 crore by issuing convertible warrants and new equity shares at a price of Rs. 50 each.
Details of the fundraising and share allotment
SpiceJet's funding plan involves issuing equity shares to 58 allottees preferentially, including the Mahapatra couple. Preeti will receive 20 crore shares for Rs. 1,000 crore, giving her a 17.66% stake in the airline after both shares and warrants are allotted. Harihara will be issued two crore stocks for Rs. 100 crore, resulting in a 1.77% stake in the airline. Other notable stakeholders include Aries Opportunities Fund (3.53%) stake and Elara Capital (8.83%) after the conversion of warrants and shares.
SpiceJet's financial situation and market performance
For the quarter ending September 2023, SpiceJet reduced its net loss to Rs. 431.54 crore from Rs. 837.8 crore the previous year. It has a market capitalization of Rs. 4,000 crore. Despite challenges such as poor on-time performance and denied boardings, the airline's stock has risen about 70% in the past six months.
Penalties worth crores for the airline
Directorate General of Civil Aviation (DGCA) data reveals that between May and October, approximately 1,89,634 passengers experienced delays of over two hours on SpiceJet flights. This resulted in Rs. 3.78 crore in compensation payments. Additionally, the airline wrongly denied boarding to 991 passengers and paid Rs. 18.11 lakh in damages. Finally, flight cancellations affected around 16,131 passengers, leading to Rs. 1.33 crore in compensation payouts.
