MUMBAI • The parent company of India's leading airline, IndiGo, began taking orders for what could become the nation's biggest initial public offering in almost three years.
InterGlobe Aviation and existing stakeholders are offering shares at 700 rupees to 765 rupees each, seeking to raise as much as 30.01 billion rupees (S$643 million), according to terms of the deal obtained yesterday by Bloomberg News.
The IPO, the first by an Indian airline since 2006, will allow IndiGo to build its fleet in one of the world's fastest-growing aviation markets.
"Indigo's market leadership position, cost competitiveness and low-cost-carrier business model, along with India's aviation potential, make IndiGo one of the consistent performers" in the country's airline industry, wrote Mr Anand Rathi of Share and Stock Brokers in a research note on Monday.
The Mumbai-based brokerage recommended that its clients subscribe for shares in the IPO.
On Monday, investment arms of foreign firms, including Goldman Sachs, Fidelity, BlackRock, Singapore sovereign wealth fund GIC and Kuwait Investment Authority, bought IndiGo shares reserved for cornerstone investors, a company filing showed.
The sale comes as Indian stocks have gained almost 10 per cent since early last month. It will help gauge investor sentiment towards the world's fastest-growing major economy as Prime Minister Narendra Modi pitches India as a safe and lucrative destination for foreign money.
If shares sell at the top end of the proposed range, IndiGo would trade at 21.3 times trailing earnings. Jet Airways India and SpiceJet, the other two listed Indian carriers, are loss-making. At the top of the range, the IPO would value IndiGo at about 275 billion rupees, making it the third-largest budget carrier in the Asia-Pacific region, according to data compiled by Bloomberg.
IndiGo is the only Indian airline to have made a profit in each of the past seven years. It had a 37 per cent share of domestic air traffic during the first nine months of the year, according to regulatory data, outpacing Jet Airways, with 23 per cent, and state-run Air India, with 17 per cent.