Addendum
AirAsia Group to score big from AirAsia India exit
October 1st 2020
AirAsia Group co-founder, Tony Fernandes, is jockeying bids between joint venture AirAsia India (AAI) majority partner, the Tata Group, and fund investors as he negotiates the sale of his company’s share of the LCC, India’s Business Standard has reported. Read More »
Malaysia’s AirAsia Berhad (AAB) owns 49% of AAI and it has been written the company has been offered US$54 million by a private fund for acquisition of its minority holding. The offer includes the potential suitor’s willingness to take on short-term expensive loans from banks and Tata Capital. It is believed the Malaysian LCC group invested $14 million-$15 million to launch the carrier, along with partner, Tata, seven years ago.
At press time, it was reported Tata had first right of refusal to decline to buy the AAB shareholding in the LCC. If it declines, the foreign fund will be the LCC’s replacement investor, the Business Standard said.
In 2012-2013, master salesman Tony Fernandes sold a billion dollar dream to Tata Group chairman, Ratan Tata. Setting up a joint venture LCC in India, he told the leader of India’s most enduring conglomerate, would bring both of them new riches with its asset light model in such a huge, potentially, airline market.
Tata was sold on the idea. Citing another AirAsia joint success, he painted a picture of instant prosperity when seeking board approval for the deal.
Until the news broke that Fernandes had an offer of $54 million from the offshore fund, he was expected to sell his holding in AAI to Tata, which took management control of the group in November last year.
Tata sources have assessed the current valuation of the 49% Fernandes holds in the LCC at beyond US$50 million.
In India’s difficult political and economic environment, Fernandes has attracted some antipathy in regulatory and industry circles because of the management style of the Malaysia headquartered LCC group.
“The blame for the venture going awry lies far more with Fernandes and Co who tried and failed to micro-manage the company from Malaysia,” a source told this reporter.
He added Tata was “left holding the can” and was in the unenviable position “of putting an unruly house in order”. Whether these are Tata’s tactics to lower the final price to be paid for the exit of Fernandes is anybody’s guess, but more than one source has told Orient Aviation this marriage is headed for divorce, a situation made clear by the latest offer for AAB’s holding in Bangalore-headquartered AAI.
