Tiger Airways gears up funds for SpiceJet bid : Srcs

Within days of the Tata Sons-Singapore Airlines joint venture for introducing a full service carrier being announced, Tiger Airways could be seeking alliance with SpiceJet. The airline is gearing up for funds to invest in SpiceJet, reports CNBC-TV18's Kritika Saxena.

After Jet Airways deal with Etihad and Tata's foray into aviation with Air Asia and Singapore Airlines, SpiceJet is next on the radar. The airline has reportedly been in talks with various investors for selling a minority stake in the company. Also read: Delighted with SIA JV, won't sell AirAsia stake: Tata Sons "Tiger Airways is actively looking at investing in India and SpiceJet is an interesting target;" said a source close to the development, who did not wish to be named. "Tiger Airways is currently in talks with PE players to raise funds to invest in the company. Oman Investment Fund is one of the players and the company is also talking to 2-3 other PE players for the sale" he added. Structure of the deal: As per the discussions between the SpiceJet and prospective buyers, the foreign investor is likely to get upto 40 percent in the company, according to sources. If the deal goes through, sources say PE players will get only a part of that 40 percent in the company. The FDI limit is 49 percent. So, there is an option for the foreign players to hike that stake. What's in it for Tiger Airways? Tiger airways, is a low cost airline, headquartered in Singapore. The company is in direct competition in Air Asia, which also has a similar business model in India. It is not in direct competition with Singapore Airlines since the company is a high end 5-star carrier. However if the deal goes through, it will aid Tiger Airways in its international expansion plans and will also allow SpiceJet to bring down its debt, which rose by 119 percent in FY13 year on year. There is a timeline that is likely to be set by SpiceJet soon. About 2-3 months will be taken to evaluate all the bids and a decision will be made. In its official statement to CNBC-TV18's queries, a spokesperson of Tiger Airways said; "Tigerair, in its regular course of business, explores various avenues of business development, including potential interline arrangements with other airlines. However, it is not in our practice to comment on market rumours. We will however, make requisite announcements on this front should there be material developments.

When contacted for its comment on the likely deal, SL Narayanan, group chief financial officer, Sun Group said, “While we are not averse to the idea of partnering with a reputed name in aviation, it will be improper to comment prematurely on the possibilities of a deal fructifying. That said, we also wish to categorically state that the report this afternoon suggesting that we are in the process of offloading a substantial equity stake to Tiger Airways is totally misconceived . There is absolutely no truth in that story. "

SpiceJet is promoted by the Sun Group.