Tatas hike AirAsia India stake to 83.67% ahead of Air India bid
04 Jan 2021
Tata Group has increased its stake in AirAsia India, its joint venture with Malaysia’s Air Asia Berhad to 83,67 per cent by acquiring an additional 32.67 per cent for $37.66 million (Rs276 crore).
Tatas also has the option to buy the remaining 16.33 per cent stake for $18.83 million.
This move comes as the race for Air India’s divestment heats up, with its second phase beginning on January 5.
Tatas have shown preliminary interest in bidding for the cash-strapped national carrier. Last week, Tata Sons filed an Expression of Interest to acquire Air India.The government will announce the names of qualified bidders in the second phase of the divestment process.
AirAsia Group Berhad also made an announcement that it would sell 32.67 per cent stake in AirAsia India to Tata Sons for $37.66 million (?276 crore).
Tata group earlier owned 51 per cent of the stake in the joint venture. This move gains significance as the race for Air India heats up, and
The second phase of the strategic disinvestment of Air India will start on 5 January, with the announcement of the names of the shortlisted bidders allowing them to file a request for proposal (RFP) and thereafter there will be a transparent bidding process, said a presentation by the ministry.
Earlier this year, Rashtriya Swayamsevak Sangh ( RSS) had raised their opposition against the sale of Air India to foreign airlines and conveyed their concerns to the government. RSS had said that the national carrier must be only sold to an Indian entity. Other Swadeshi lobbies, including Swadeshi Jagran Manch (SJM), had raised their resistance as well.
Meanwhile, earlier this month, BJP MP Subramanian Swamy had urged the government to disqualify Tata Sons from the Air India disinvestment process till a final decision on his plea against Tata Sons and AirAsia India is taken by the court. Subramanian in 2013 had filed a petition in the Delhi high court challenging the illegal grant of licence to Air Asia India.
“This transaction is in line with our initiatives towards reducing cash utilisation for the Group and will allow us to use cash to grow market share in our core markets in Asean, particularly in Malaysia, Thailand, Indonesia and the Philippines as well as for our future expansion into Cambodia, Myanmar and Vietnam.,” said President (Airlines) of AirAsia Group, Bo Lingam.
“India will remain an important market for AirAsia. TSL has been an excellent partner and we look forward to continue working closely together in other areas of growth,” he added.
Cash-strapped Air Asia Berhad in a Malysian stock exchange filing said the cash received as purchase consideration will be utilised as working capital in Q1 for the parent company.
The company also hinted at further liquidation of its assets saying “as India is a non-core market for AirAsia (being a non-ASEAN country), the company will continue to regularly reassess its business strategies and dispose of non-core investments to augment its liquidity.”