INDIA BUSINESS WORLD - FEBRUARY 1st - FEBRUARY 15th - 2008
ADAG STAKE IN DECCAN CROSSES 10%
ADAG has increased its stake in Deccan Aviation to 10.76% at the end of January, up from just over 3% in the September quarter. The investment has been made through group companies like Reliance Life Insurance and Reliance Capital trustees. Even as the Anil Ambani group increased its stake, other investors like the London-based Investec bank, UBS Securities and ICICI Ventures have exited the company.
Investec had picked up a 1.45% stake in the low-cost carrier when it signed a $100-million deal to buy the rights to Air Deccan’s delivery slots for its Airbus A320 aircraft. ICICI Ventures was among the early investors in the airline with Capital One, which continues to hold about 3% through its investment arm Subria. The public holds about 34% of the company while the UB group’s stake is now up to 49.77%.
ADAG was among those interested in picking up a stake in Deccan when the cashstrapped airline was looking for investors around this time last year. The group subsequently picked up a small stake through its investment arms and continues to hold a stake in the airline even after the entry of the Vijay Mallya led UB group. However, in the last two months, it has been steadily picking up shares from the market and increased its share to over 10%.
Despite the extended period of losses that the airline business is going through, several large Indian corporate groups still see these companies as worthwhile investments. The Tata group has roughly 6% in the Delhi-based SpiceJet. Both Reliance-ADAG and the Tatas have said the investments are purely financial and they have no intention of entering the airline industry.
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