SpiceJet's co-founder Ajay Singh to sell more than 10% of his stake to raise ₹3,000 crore: Report

SpiceJet's co-founder Ajay Singh to sell more than 10% stake for funds at a time when the its market share dropped below 4%, with only 22 operational aircraft

Ajay Singh, the co-founder, chairman, and MD of SpiceJet is planning to sell more than 10% of his stake in the cash-strapped airline for raising around ₹3,000 crore, the Economic Times reported, citing unnamed sources. HT couldn't independently verify the information.

Ajay Singh, Chairman and Managing Director, SpiceJet (Sanjeev Verma/HT)

This comes at a time when the airline's market share dropped below 4% having only 22 operational aircraft, since more than 30 planes are currently grounded due to engines and spare parts not being available.

Why is Ajay Singh selling more than 10% of his stake in SpiceJet?

The share sale is to raise fresh capital for the company, as SpiceJet is in immediate need of funds, but fundraising attempts have been futile so far.

The company had also defaulted when it came to paying vendors which even includes aircraft lessors, leading to some filing court petitions to declare the airline as bankrupt. SpiceJet's total liabilities was around ₹9,000 crore, which includes ₹2,700 for aircraft lessors, as per the company's latest annual report.

The airline had earlier planned to raise ₹2,250 crore from a group of 64 investors, but could only raise ₹1,060 crore, due to one of the primary investors backing out.

On top of this, SpiceJet had also delayed paying employees their salaries after recently defaulting on provident fund contributions. However, the airline claimed that 95% of its staff did receive their salaries in a “phased manner.”

Singh's stake is expected to fall somewhere between 30-35%, with him and his family currently holding 47.8% stake in the airline, the report read, adding that 38.8% was pledged to lenders. ICICI Securities and JM Financial have been appointed to manage the fundraising process, the report read.