New Delhi: Is India's first low-cost airline Air Deccan about to take off with a new pilot on board? Could the process of finding new investors trigger a management change at the cash-strapped airline?
Will Captain Gopinath, Founder and CEO take the NR Narayanamurthy route to a back seat at Air Deccan? Two years after hiring a Chief Operating Officer, is the founder of Air Deccan, contemplating handing over management to a professional team altogether? Well yes, or at least that is what Captain Gopinath told CNBC-TV18 not so many months ago.
"I am firmly of the opinion that I am not building a family business. I also firmly believe that shareholders should distance themsleves from managamenrt because it is good for the company. I will continue to be Chairman. In the next two or four years, I will get someone to be CEO,” Gopinath, Managing Director, Air Deccan was quoted by moneycontrol.com.
But it may happen faster than that, catalysed by the fact that cash-strapped Air Deccan is looking to raise USD 100 million from a private placement of shares. Now what does that have to do with professional management? One reason is to attract new investors, who may have more confidence in a professional CEO. The other is a possible shift in management control.
To raise $100 million or Rs 410 crore, Air Deccan would have to, at current market value, issue 2.9 crore new shares. This translates into a 22-25% stake. If the stake placement brings in a a single large investor, then it is possible that the investor will become the single-largest shareholder in Air Deccan, with majority Board presence as well as control. After all the promoters together own just 22%.
So, theoretically, the private placement could also trigger a change in managment. Air Deccan officials are tightlipped about the consequences of finding new investors; all that the airline confirmed was that it intends to complete the fund-raising process in a month. So, maybe Gopinath's words could come true sooner than expected.
Meanwhile, Deccan Aviation Chief Financial Officer Ramki Sundaram told moneycontrol.com that Air Deccan has asked Sebi to investigate the unusual movement in its stock price. Last Thursday, Deccan's share price surged 22% on the back of unconfirmed reports that it was close to placing a stake with an investor. Speculation is rife that the contenders are Anil Ambani, Vijay Mallya and a bunch of private equity players.
With excerpts moneycontrol.com
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