Will Bravia Capital invest in SpiceJet?

India’s aviation sector is bleeding. Kingfisher is almost down and out, Air India is saddled with debt, Jet has persistently posted losses and budget airlines SpiceJet and Indigo are just about making profits.

Most foreign carriers and private equity investors are on the wait-and-watch mode despite the government allowing them to purchase stake in Indian carriers as the industry has been in the black for several quarters now. Secondly, the high fuel prices and rising cost of borrowing has also proved to be a dampener. Passenger traffic too has not expanded as rapidly as airlines had expected.

[caption id=“attachment_512635” align=“alignleft” width=“380”]  Most foreign carriers and private equity investors are on the wait-and watch mode despite the government allowing them to purchase stake in Indian carriers. AFP[/caption]

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In all this gloom and doom Hong Kong-based investment firm Bravia Capital may just be the knight in shining armor for the debt-ridden industry. According to a report in the Economic Times, the private equity firm is eyeing investments in India as the government’s change of regulation to allow foreign airlines to pick up equity is providing opportunities.

“I am here. We’ve been watching the Indian market for quite some time. We have been talking to the airlines and we have a pretty consistent interest in the market. We are looking for opportunity and feel that there would be an investment definitely,” Bravia Managing Director Hal Hayward was quoted as saying in the paper.

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Bravia Capital, in September, came up with a whitepaper on the challenges and opportunities of airlines business in India where it said that majority of airlines’ assets are stressed, which present an opportunity to enter this market at the right entry point (i.e. acquiring asset at attractive prices).

“Such an investment strategy could lead to potential returns, which are quite satisfactory,” added the whitepaper.

Though the company has not specified which company it will be liasoning with, speculation has it that Kalanidhi Maran-owned SpiceJet could be the best possible candidate as it not only has a healthier balance sheet but also has lower operating costs than their full-service counterparts.

“We are in talks with Bravia Capital and some others,” SpiceJet Chief Executive Neil Mills, was quoted as saying in The Wall Street Journal. The company, however, has not finalised any investor yet and the size of the fund to be raised.