Akasa Air Looks To Raise $75-100 Million In Fresh Equity To Expand Business

The move to raise funds will see Rakesh Jhunjhunwala family's 46 per cent stake in Akasa Air diluted

Akasa Air, India’s India's newest airline, co-founded by late billionaire investor Rakesh Jhunjhunwala, is looking to raise $75-100 million by offering fresh shares to expand its business, according to a news report. Founded in December 2021, Akasa Air wants the money to make pre-delivery payments for aircraft, according to a report by the Economic Times quoting sources. The Mumbai-based airline ordered 72 Boeing 737 Max, of which 19 have been delivered.

Akasa Air’s first commercial flight started on August 7, 2022 between Ahmedabad and Mumbai. Jhunjhunwala passed away a week later.

The move to raise funds will see the Jhunjhunwala family's 46 per cent stake in the airline diluted. The family holds this stake through a trust and despite the potential dilution, it will remain the largest shareholder. Citing sources the report said, "The trust is unlikely to participate in this round of funding but even after the dilution will retain a substantial stake. The aviation sector is on a boom and the value of Akasa with strong financials and led by professionals will only rise."

The airline, which commenced operations less than a year ago, has reached out to potential investors, including PE firms and high-net-worth individuals, for raising capital. Any infusion of capital will be based on a $650-million valuation.

US-based hedge fund PAR Capital Management is one of the names doing the rounds and may subscribe to the shares to add to its existing 6 percent stake in the low-cost airline. Brokerage firm ICICI Securities said on June 12 the outlook for airlines remained strong due to healthy growth in traffic, declining jet fuel prices and ticking ticket values.

A source said the Jhunjhunwala family has the right of first refusal on any equity fundraising the airline plans.

A spokesperson for Akasa Air called this speculation and refused to comment. Utpal Seth, senior partner and CEO of Rare Enterprise, Jhunjhunwala's investment outfit, and PAR Capital didn't respond to queries, the report said.

The airline has 19 aircraft in its fleet and commands a 4 percent market share. The company was looking to place a triple-digit aircraft order before the end of 2023, said CEO Vinay Dube.