SEBI had previously kept IPO on hold in June 2021 due to some pending enquiry against the Wadia Group that owns 73.33% of the Company.
Key points to note –
- The Company can now go ahead and file the final prospectus.
- Roadshows can happen to gauge investor interest. The Company aims to raise Rs 1,500 crore through pre IPO placement.
- Financials of the Company are nothing to rave about. It had a net debt of Rs 7,346 crore and a negative net worth of Rs 1,961 core as on December 31, 2021.
- Covid has significantly impacted every airline business globally. However, the same is expected to pick up significantly as economies open up both due to return to normalcy as well as revenge traveling.
How and when Go First’s IPO happen, would be an interesting development to watch for airline business in general and Wadia group in particular.
The Go First issue can have implications for other listed entities in the group including Britannia, Bombay Burmah (BBTC), Bombay Dyeing and National Peroxide.
Reason – other entities of the group always get a cautious view if there is a bleeding business in the group that needs to be supported continuously. As of now, Go First being privately owned by the Wadia family has that impact on the other group entities.
As per the newspaper reports, IPO plans have been put on hold due to the raging 3rd Covid wave.
Analysts however expect the IPO to happen sooner than latter given the strong outlook for the travel sector in general once the Covid wave subsides.
I am not sure if the plans have been put on hold due to the Covid wave as financial markets in general continue to be strong globally, and a loss making business like Go First needs that.
What is the surety that when Covid wave subsides, financial markets will continue to remain strong?
Jeh Wadia, former MD of Go Airlines, is understood to have handed over the usage of the trademark ‘Go’, owned by his company Go Holdings, back to Wadia Group, signalling a reconciliation in one of India’s oldest business families.
This should remove a key overhang and pave the way for the IPO to happen soon.
https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/truce-in-wadia-family-jeh-wadia-hands-over-go-trademark-to-group/articleshow/90988175.cms?from=mdr
As per newspaper reports, Wadias are trying to either find a strategic investor into Go First or exit it completely.
Reasons –
Many of the above operational challenges are inter linked to the engine parts issues because of which half of its fleet is grounded. However, to me that would be over simplifying it.
It’s speculated that Wadias may continue to support if the engine issues are resolved.
To me, unlikely that will happen for very long. They are speculated to have infused around Rs 3,000 cr into the business in last 15 months to keep it afloat. These are significant sums and personally I don’t see much reason why they will keep throwing money over an extremely challenging business.
Go First files for voluntary insolvency resolution before NCLT
Airline made the announcement shortly after Go First said it will temporarily suspend flight operations on May 3 and 4 due to a severe fund crunch.
“It is an unfortunate decision (filing for voluntary insolvency resolution proceedings) but it had to be done to protect the interests of the company,” CEO Kaushik Khona said.
The flights will be restarted once the NCLT admits the application, Khona said.
The airline has informed the government about the developments and will also be submitting a detailed report to aviation regulator Directorate General of Civil Aviation (DGCA).