Akasa Air Seeks $75-100 Million in Fresh Equity, Aims to Reduce Jhunjhunwala Family’s Ownership

Akasa Air, India’s recently launched airline co-founded by the late billionaire investor Rakesh Jhunjhunwala, aims to secure $75-100 million in funding through the issuance of new shares in order to fuel its business expansion.

Akasa Air, established in December 2021, intends to utilize the funds to make pre-delivery payments for additional aircraft. The Mumbai-based airline has already placed an order for 72 Boeing 737 Max planes, with 19 of them already being delivered.

Akasa Air, the airline co-founded by Rakesh Jhunjhunwala, is planning to raise funds through a new round of funding, resulting in the dilution of the Jhunjhunwala family’s 46% stake in the company. However, the family will remain the largest shareholder despite the dilution. The family’s stake is held through a trust, which is not expected to participate in the upcoming funding round. Akasa Air’s solid financials and professional leadership position the company for growth in the booming aviation sector.

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Akasa Air, a relatively new airline that began operating less than a year ago, is actively seeking investors, including private equity firms and high-net-worth individuals, to raise capital. The company is targeting a valuation of $650 million for the funding round. There are reports suggesting that US-based hedge fund PAR Capital Management is among the potential investors and may increase its existing 6% stake in the low-cost airline by subscribing to the shares.

ICICI Securities, a brokerage firm, stated on June 12 that the airline industry’s prospects continue to be positive, citing robust traffic growth, decreasing jet fuel prices, and rising ticket values.  However, the Jhunjhunwala family holds the right of first refusal for any equity fundraising initiatives by the airline.

When approached for comment, an Akasa Air spokesperson dismissed this as speculation. The report further noted that there was no response from Utpal Seth, the CEO of Rare Enterprise, Rakesh Jhunjhunwala’s investment firm, or PAR Capital to queries on the matter.

According to CEO Vinay Dube, Ak asa Air currently operates a fleet of 19 aircraft and holds a market share of 4 percent. The company has expressed its intention to finalize an order for a significant number of additional aircraft by the end of 2023.

Akasa Air conducted its inaugural commercial flight on August 7, 2022, operating between Ahmedabad and Mumbai. Unfortunately, Rakesh Jhunjhunwala, one of the co-founders of the airline, passed away a week after this significant milestone.