For the past three-and-a-half years, the deals happened mostly in August or September. Now that August is about to end, and September is around the corner, it is time for the Gangwal family, the former co-owner of IndiGo, India’s largest airline, to go on a share-selling spree. According to a news agency, Rakesh Gangwal, and his family trust will collectively sell just over three per cent stake for $800 million.
The sale will bring down the family’s ownership to below five per cent. In February 2022, Gangwal fought with his partner, Rahul Bhatia, over alleged corporate governance issues. The fight was bitter, emotional and public. Since then, he vowed to get out of IndiGo. But a bulk sale of such proportions would have reduced his profits due to a decline in stock price. So, he waited and watched, even as he sold small stakes at regular intervals.
As per a term sheet, cited by the agency, just over 12 million shares are on the table, with a price tag of of just over Rs 5,800, or a slight discount over the market price. The proposed transactions will be executed through one or more sales on the two stock exchanges, NSE and BSE. The sale is secondary, and the proceeds will go to the selling shareholders (former owners).
After its completion, the holdings of Gangwal and his family trust will come down from 7.81 per cent to 4.71 per cent. As part of the structure, IndiGo’s vendors and their immediate relatives will be subject to a 150-day lock-in period, restricting them from selling the shares during this period. It indicates that some of the suppliers may be interested in increasing their stakes in the airline.
However, there is a catch. According to the agency, the term sheet allows for a negotiated transfer of shares worth at least $300 million, or more than a third, to a single investor or group, provided it is done at or above the offer price, and the buyer agrees to adhere to the lock-in period. This implies that there may be a large bulk buyer, who is interested in buying or adding almost one per cent. It may be an institution, a mutual fund, or even someone close to Bhatia.
Since February 2022, the Gangwal family has been an active seller every few months. In September 2022, less than three per cent stake was sold for Rs 2,000 crore. It was not a lucrative one since the price remained flat between February and September 2022. In February 2023 came the next round, with a collective sale price of Rs 3,000 crore. In August the same year, another sale of less than three per cent happened for less than Rs 3,000 crore.
By this time, the stock had inched up to Rs 2,500, up from Rs 1,800-2,000 17-18 months ago. In August 2024, a sale of just over five per cent fetched a massive Rs 9,500 crore, as the stock price skyrocketed to over Rs 4,800 (August 30, 2024). In May this year, Gangwal and his family trimmed their holding by 5.72 per cent, and earned Rs 11,564 crore. With the current sale, there will be an addition of another Rs 7,000 crore to the Gangwal’s bloated piggy bank.
The past year turned out to be great for the stock, and a good time to sell because of the high valuations. Even as the stock indices yo-yoed wildly and violently, IndiGo crossed Rs 6,000, and the market capitalisation was Rs 2.33 lakh crore (August 27). However, there is a huge difference between the high (Rs 6,232.5) and low (Rs 3,780) over the past 52 weeks. As the lyrics of the song goes, “Come September, everything wrong gonna be alright, Come September.”