ICICI Bank is said to be in advanced talks to lend about $150-200m to Kingfisher Airlines for its fleet expansion programme in yet another indication that the KV Kamath-run bank enjoys taking risks and betting on fledgling businesses with great potential, but little to show in the way of initial performance.
People familiar with the development said the talks between ICICI and UB are at an advanced stage. “We talk to several banks at a time. ICICI is our regular bank and certainly we talk to them also,” a top UB official said.
The loan comes after Kingfisher’s deal with Goldman Sachs for a $150m equity infusion fell through following the crash in the stock markets and the growing problems in the aviation sector.
Though passenger traffic has jumped and companies continue to expand fleets, yields have fallen amidst rising costs and stagnant or falling air fares. Kingfisher has also dropped plans to rope in other private equity investor.
The loan from ICICI would give the airline a breathing space for at least two years and enable it to fund its fleet programme. T
he move once again shows that ICICI Bank is willing to buck industry trend and back risky ventures. It was Mr Kamath, who in the late 1970s, sanctioned a loan to Dhirubhai Ambani for Reliance Industries’ polyester ventures when other banks were unwilling to do so.
More recently, ICICI Bank loaned Rs 1,250 crore to UB group in June last year for funding its acquisition of Shaw Wallace, when it was not very clear if Mr Mallya would win the bid.
Kingfisher, which took off in May ’05 with a single aircraft flying the Mumbai-Bangalore route, now has 12 aircraft covering all metros in the country.
Within this short period it has become a major competitor for the No 1 airlines Jet Airways. Kingfisher was also a serious contender, at least in the initial stages, for Air Sahara when it was put on the block.
People familiar with the development said the talks between ICICI and UB are at an advanced stage. “We talk to several banks at a time. ICICI is our regular bank and certainly we talk to them also,” a top UB official said.
The loan comes after Kingfisher’s deal with Goldman Sachs for a $150m equity infusion fell through following the crash in the stock markets and the growing problems in the aviation sector.
Though passenger traffic has jumped and companies continue to expand fleets, yields have fallen amidst rising costs and stagnant or falling air fares. Kingfisher has also dropped plans to rope in other private equity investor.
The loan from ICICI would give the airline a breathing space for at least two years and enable it to fund its fleet programme. T
he move once again shows that ICICI Bank is willing to buck industry trend and back risky ventures. It was Mr Kamath, who in the late 1970s, sanctioned a loan to Dhirubhai Ambani for Reliance Industries’ polyester ventures when other banks were unwilling to do so.
More recently, ICICI Bank loaned Rs 1,250 crore to UB group in June last year for funding its acquisition of Shaw Wallace, when it was not very clear if Mr Mallya would win the bid.
Kingfisher, which took off in May ’05 with a single aircraft flying the Mumbai-Bangalore route, now has 12 aircraft covering all metros in the country.
Within this short period it has become a major competitor for the No 1 airlines Jet Airways. Kingfisher was also a serious contender, at least in the initial stages, for Air Sahara when it was put on the block.
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