Go Air’s Rs 3600 crore IPO in abeyance by SEBI

Go Airlines’s Rs 3,600 crore Initial Public Offering (IPO) has been put on hold by the Securities and Exchange Board of India (Sebi).

While the airline denied receiving any communication from the stock market regulator, Sebi’s website shows that it had sought clarifications from ICICI Sec­urities, the lead banker for the pre-issue, on June 11. The issuance of observations on the airline’s draft red herring prospectus has been kept in abeyance, it said.

The airline, which is controlled by the Wadia group, was renamed Go First and repositioned as an ultra-low-cost carrier. It filed paperwork last month to fund Rs 36 billion via a stock offering. It intends to utilise the profits to pay off debt, pay oil companies, replace letters of credit issued to aircraft leaseholders for lease rent, and fund future aviation maintenance.

Market experts said, typically, an IPO issue is kept in abeyance when the violation is serious in nature. They said it could take a company more than a month to address the issue before the regulator begins the vetting process afresh.

In this case the exact observations issued by SEBI could not be ascertained, but the regulatory action could delay the airline’s fundraising plans.

The Wadia family and its firm, Go Investment, own 100% of the airline, according to records filed with Sebi. A lender’s coalition has admitted to committing 22.56 per cent of Go Investment. The airline suffered Rs 4700 million in the nine months ended December 2020, despite overall revenue of Rs 14.38 billion. According to the consolidated financial accounts included in the IPO filing, the airline lost Rs 12.7 billion in FY20 on an income of Rs 72.58 billion.

While discussions with leaseholders were identified as a risk issue in the IPO, the airline was free to agree with the French lender BNP Paribas for a longer payback schedule on all its loans.

Lessors have also expressed the interest in deferring of lease payments due to the second wave of the epidemic.

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