News: Tata group picks up less than 10% in SpiceJet

(RTR 11/12/2006) New Delhi - Tata group on Monday said it had picked up "less than a 10 per cent stake" in domestic budget airline, SpiceJet Ltd., in a deal an industry source valued at about $22 million.

The source added existing investor Istithmar, a Dubai-based investment firm, would raise its stake to 15 per cent from 10 per cent this month.

"It is not a strategic investment, purely a financial one," a spokesman for the Tata group, who did not want to be identified, told Reuters.

"There is a board meet scheduled later in the afternoon to discuss fund raising," a SpiceJet official said without giving further details.

An industry source close to the deal said the carrier had "issued fresh equity" for a "qualified institutional buyer deal for about 7-8 per cent of the company's current market cap".

"They have not done a preferential (allotment), and equity of their directors has not been diluted," the source, who declined to be named, said.

In November, New Delhi-based SpiceJet said it was in talks with Indian and foreign strategic investors for a "plain-vanilla equity sale" to raise $60 million and hoped to finalise terms and conditions with investors by end-December.

Spicejet has already raised money twice -- through a $80 million overseas convertible bond issue and a $12.5 million stake sale to Istithmar -- since it began operations in May 2005.

The airline's revenues for the business year ending May crossed Rs 453 crore and it hopes for 100 per cent annual growth in sales.