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Not just Air India, Interups interested in Indian aviation; plans to invest $9 billion in 5 years

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New Delhi: Air India has received expressions of interest from four potential bidders, one of which, a US-based firm that invests in stressed assets, Interups Inc, plans to invest $9 billion in India’s aviation sector over the next five years irrespective of the Air India deal.

“We are bullish on India’s aviation sector and plan to invest $9 billion in it over the next five years, as we see a lot of growth potential in the sector over a period of time,” Laxmi Prasad, chairman of Interups Inc, told ET.

Prasad said Air India would be its second airline investment, as the company is already in the process of investing Rs 1,800 crore in another airline. He refused to reveal the name and the region of the airline the company is investing in.

Interups started as a tax practice and moved to investing in gold as a tax saving product after the 2008 global financial crisis.

Prasad said Interups has split the opportunity between residential real estate investment trust (REIT) assets, pharmaceuticals and aviation. For instance, it has invested in a pharma company that is in active discussion to produce Russian Sputnik Covid vaccine.

Interups, the Tata Group, an employee consortium and SpiceJet, have shown interest to buy 100% stake in Air India.

After a failed attempt in the past to sell 76% in Air India in 2018, the government on Monday received interest from four parties to buy 100% stake in the national carrier. The Air India offer includes its low-cost international subsidiary Air India Express as well as a 50% stake in ground-handling unit AISATS.

the company plans to reduce the flab of the airline by monetising the assets that come with the airline and focus on running the airline by restructuring the existing management structure.

“It plans to reduce the flab of the airline by monetising the compay’s assets and focus on running the airline by restructuring the existing management structure.”

— Big Plans

Interups has said it will offer Air India employees a 51% stake in the national carrier without having to invest any capital.

“Willing and continuing employees will be offered 51% in the consortium that acquires the airline. No capital investment is required,” Prasad told ET.

Prasad said the company plans to reduce the flab of the airline by monetising the assets that come with the airline and focus on running the airline by restructuring the existing management structure. “We can monetise aircraft in the fleet through sale and lease back and the money earned through it can be used to clear aircraft debt. We will monetise other assets too. We will need to fund the working capital, which can be arranged easily,” he said.

Analysts, however, said Interups may not have the financial wherewithal as much as the Tata Group. “Looking at the profile and assets under management, Interups does not come across as an investor with pockets deep enough to run Air India, which would need at least $2 billion immediately after the sale to stabilise operations,” said an industry insider, who did not wish to be identified.

Prasad said the impact of Covid-19 has brought down the valuation of aviation assets across the globe, including India, making it the best time to invest.

“The proposal (interest in Air India) would not have been a hot favourite for bidding in 2018, but now aviation sector valuations have gone for a toss the world over… We are confident of passenger traffic growing exponentially and with Air India predominantly owning some premium landing rights across the globe, it will still be a leader among Indian carriers in the international waters,” said Prasad.

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