17 July 2019: A TPG Capital-led consortium is evaluating a potential bid for Jet Airways under the IBC (Insolvency and Bankruptcy Code), multiple sources with knowledge of the matter told Moneycontrol.
US private equity firm Apollo Global Management, which specialises in distressed firms, is also keen to strike an alliance with other suitors to bid for the debt-ridden airline. The firm, which has $280 bn of assets under management, has reached out to the Jet employees consortium in this regard, sources added.
Another source told Moneycontrol that a lot hinges on the lenders making JPPL a party to the bidding process.
“TPG Capital is interested in Jet Privilege Private Limited (JPPL), which has better financials compared to Jet Airways, has seen a spike in membership and has shown profits in the past. But the only hurdle is JPPL is an independent entity is not a party to the current insolvency proceedings. The SBI-led lenders’ consortium needs to take a crucial call on whether JPPL can be made a party to the bidding process,” said a second source.
Jet Privilege Private Limited ( JPPL) is the frequent flyer loyalty programme of Jet. It was incorporated in 2012 as a wholly-owned unit of Jet Airways but was separated as an independent entity in 2014 after Etihad Airways purchased a 50.1% stake for $150 million. The remaining stake is held by Jet Airways. On Point Loyalty, a global management consultancy focused on airline loyalty programmes, had valued Jet Privilege at $1.131 billion (about Rs 7,300 crore) last year, based on the average rupee exchange rate in November.
“Apollo Global Management met the Jet Airways employees consortium recently. They are value investors and see a good opportunity in Jet Airways,” said a third source.
The lenders of Jet concluded their first CoC ( Committee of Creditors ) on July 16th, 2019 and are expected to invite EOIs ( expressions of interest ) by the end of the week The deadline for submission of EOI’s by potential suitors is likely to end in the first week of August. Ashish Chhawchharia of Grant Thornton was picked earlier by the SBI-led consortium as the resolution professional for Jet Airways.
Moneycontrol was the first to report on June 29 that a Hinduja Group-Etihad Airways consortium gearing up for an IBC bid for Jet Airways and the Tata Group and Qatar Airways in an exploratory mode for the same. Later, Tata SIA Airlines chairman Bhaskar Bhatt was quoted as follows: “With demand evidently remaining unfulfilled, we like other airlines have sought to get more aircraft into our fleet, including those grounded at present. Acquiring (Jet’s) Boeing fleet makes our otherwise A320 Airbus fleet asymmetric but it will at least service the gap even if temporarily,” indicating that the conglomerate’s interest may be limited to only some of the airlines’ assets.
Moneycontrol had also reported earlier on June 28 that the employee consortium had joined hands with London-based AdiAgro Aviation to bid for 75 percent in the airline through the IBC process. AdiGro Aviation Founder Sanjay Viswanathan said the consortium will bid for 75 percent stake, of which the London-based firm will take 49 percent, and the rest will be with the employees’ consortium. There is a 49 percent cap on FDI in the aviation sector.
After failed negotiations earlier with multiple suitors, the SBI-led consortium decided to take Jet Airways to the bankruptcy court on June 17 and on June 20, the National Company Law Tribunal (NCLT) admitted the insolvency petition. The tribunal also directed the interim resolution professional to submit fortnightly status reports on the account and try and complete the resolution process in three months citing “national importance”. Apart from the debts owed to banks, Jet also owes vendors, lessors and salaries to its employees. In total, its financial obligations amount to Rs 25,000 crore.
In response to mailed queries from Moneycontrol, TPG Capital declined to comment. A spokesperson for AION Capital, a joint venture of Apollo Global Management & ICICI Ventures also declined to comment.