From 2018 to now, how govt has sweetened AI deal

In an effort to make the Air India disinvestment more attractive, the government has relaxed the bidding norms wherein the net worth of potential bidders has been fixed at Rs 3,500 crore and the minimum stake for an individual consortium partner has been lowered to 10 per cent. 

In 2018, when the government sought to offload 76 per cent stake in Air India, the net worth amount and minimum consortium partner limit were set at Rs 5,000 crore and 26 per cent, respectively. 

The government on Monday came out with the preliminary information memorandum (PIM) for 100 per cent disinvestment of debt-laden Air India as well as the sale of Air India Express and a 50 per cent shareholding in equal joint venture AISATS. 

A person in the know of the PIM details said an entity can put in bid for Air India on the "strength of its parent", which was not there before. 

A consortium can participate in the disinvestment process, provided each partner has at least 10 per cent stake as well as 10 per cent of the Rs 3,500 crore net worth requirement, according to the bid document. 

The lead member of a consortium should have at least 26 per cent stake. 

Individuals are allowed to bid as part of consortium. 

Also, a domestic carrier without net worth can have up to 51 per cent stake while the partner should be able to comply with the Rs 3,500 crore net worth criteria.

In 2018, the government had proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players. 

While the government would retain 24 per cent stake in the national carrier, the winning bidder would be required to stay invested in the airline for at least three years. 

As per the 2018 preliminary information memorandum document, the transaction involved Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd. 

Potential bidders for Air India will have access to draft share purchase agreement and all records of the airline in the initial stage of the disinvestment process itself, according to the bid document. 

Besides, a due diligence report about the airline would be provided to potential bidders before the request for proposal (RFP) stage. 

Generally, access to all data records and draft share purchase agreement (SPA) are provided to bidders after the preliminary information memorandum (PIM) stage. 

An official in the know said the legal and technical aspects of various contracts would be looked at during the due diligence process. 

The government would soon be appointing a technical and a legal advisor for carrying out the due diligence. 

Entities seeking access to "data room" and SPA would have to deposit Rs 1 crore. 

The last date for submitting expression of interest (EoI) is March 17 while the last date for queries related to the disinvestment is February 1.