“Bids have been opened, and the winner has been decided, but the announcement will only come after the committee of ministers approves it,” said a top official aware of the matter. He added that the committee has the power to approve the sale and it may not “technically” have to go to the cabinet for approval. The two bidders for Air India are the Tata Group and
chairman Ajay Singh in his private capacity. The Tata Group and Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey didn’t respond to queries.
Share Purchase Agreement
The Tata bid is about ₹3,000 crore higher than the reserve price set by the government and about ₹5,000 crore more than the bid by Singh, said the people cited above. Government sources have declined to comment on reports that have put the reserve price at ₹15,000-20,000 crore.
“The reserve price was decided after bids were called to ensure that bidders do not get to know about the reserve price before their bids. This ensured utmost secrecy when it comes to the reserve price,” said another top official on condition of anonymity.
The reserve price was decided after valuation advisor RBSA and transaction advisor EY made a presentation to the committee of secretaries headed by the cabinet secretary on Tuesday.
Both bidders had been given a share purchase agreement (SPA) at a meeting held with them on Wednesday, said the people cited above. The divestment process will begin once a formal announcement is made after the Shah-led committee picks the winner. The panel includes finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and aviation minister Jyotiraditya Scindia.
“We expect that the transfer process will begin with the SPA and the target is to hand over the airline to the new owners completely in four months,” said one of the officials cited above.
The government will divest its 100% stake in Air India, Air India Express and a 50% stake in ground handling company AISATS. Bids for the carrier are being sought at enterprise value. Of Air India’s total enterprise value, as part of the formula, a minimum 15% will go to the government and the rest will be used to reduce existing debt.