Rakesh Gangwal, the co-founder of InterGlobe Aviation, is reportedly preparing to divest a significant portion of his stake in IndiGo Airlines (6E), India’s largest airline. The sale, expected to be executed through a block deal, could be worth up to $804 million, according to recent reports from ET Now.
Gangwal is set to offload approximately 8.1 million shares, translating to around a 2% stake in the airline. The floor price for the sale may be set at Rs 4,593 per share, representing a 5.5% discount from IndiGo’s current market value. This pricing strategy is typical in block deals, where sellers offer a discount to attract institutional buyers and ensure a swift sale. The stake sale is part of Gangwal’s gradual exit from the airline, which he co-founded in 2006 with Rahul Bhatia. He has been steadily reducing his shareholding in the company over the past few years, following a fallout with Bhatia over corporate governance issues. As of the last reported filings, Gangwal and his family held about 29.72% in IndiGo.
Gangwal’s move to further reduce his stake could have several implications for IndiGo and the broader Indian aviation market. For IndiGo, the sale represents a shift in the company’s shareholding pattern, potentially opening the door for new institutional investors. The discount on the block deal may also create temporary downward pressure on IndiGo’s stock price, although the airline’s strong fundamentals and market dominance could help it recover in the medium to long term. For the broader aviation sector, Gangwal’s stake sale could signal his waning interest in the Indian aviation industry. An aviation veteran, Gangwal has been instrumental in building IndiGo into one of the world’s largest and most profitable low-cost carriers. His gradual exit could indicate potential shifts in the airline’s strategic direction and the competitive landscape of the industry.
The relationship between Gangwal and Bhatia, once considered one of the most successful partnerships in Indian aviation, soured in 2019 when Gangwal raised concerns over corporate governance practices and related-party transactions within InterGlobe Enterprises, the parent company of IndiGo. This led to a legal battle and scrutiny by market regulators. Despite efforts to resolve their differences, Gangwal announced his intention to step back from the airline business and gradually sell his stake over five years.
IndiGo Airlines, with its fleet of over 300 aircraft and a market share of around 60% in India’s domestic aviation sector, remains a dominant player. The airline has been on a steady growth trajectory, recovering from the pandemic-induced downturn and benefiting from India’s rapidly expanding aviation market. Gangwal’s exit is not expected to affect the airline’s day-to-day operations, as the management team, led by CEO Pieter Elbers, continues to drive IndiGo’s expansion strategy. The airline has ambitious plans to increase its international footprint and capitalize on emerging opportunities in underserved markets.
Rakesh Gangwal’s decision to sell up to $804 million of his stake in IndiGo Airlines through a block deal marks another step in his gradual exit from the company he co-founded nearly two decades ago. While the move may have short-term impacts on IndiGo’s stock price, the airline’s robust business model and leadership position in the market make it well-positioned for future growth. As Gangwal steps back, the market will be closely watching how IndiGo navigates changes in its shareholder dynamics while continuing to lead the Indian aviation landscape.
