Premji Invest, Claypond Capital Set To Invest $125 Million In Akasa Air

Azim Premji’s Wipro and Ranjan Pai’s family office, encompassing Premji Invest and Claypond Capital, are reportedly in negotiations to acquire a substantial stake in Akasa Air. The investment, estimated at around $125 million (over Rs 1,000 crore), is intended to support the airline’s expansion and cover pre-delivery aircraft payments. Advisory firm Alvarez & Marshall is overseeing the due diligence for this potential deal.

Continuing Rakesh Jhunjhunwala’s Vision

This proposed investment reflects the vision of the late Rakesh Jhunjhunwala, a key figure in the establishment of Akasa Air. Currently, the Jhunjhunwala family holds the largest stake in the airline, with a 40% share, and will remain the principal shareholder post-investment.

Future of Akasa Air Amidst Sector Challenges

Despite ongoing discussions, the finalization of the deal may take time. However, CEO Vinay Dube reassured stakeholders that Akasa Air remains well-capitalized, emphasizing that the airline’s current funds exceed the new investment. Dube highlighted the airline’s commitment to long-term operations and solid financial backing.

Sector Dynamics and Akasa Air’s Rapid Expansion

The airline sector is witnessing intense competition, particularly between IndiGo and Air India. With GoFirst’s bankruptcy and SpiceJet’s financial struggles shrinking the major players, Akasa Air’s growth is seen as a positive development. Since its launch in August 2021, Akasa Air has quickly expanded its fleet, adding 24 aircraft—a notable achievement for a new airline. The airline’s initial orders of 76 Boeing 737 Max aircraft, followed by an additional 150 orders, have faced delays due to production issues and increased regulatory scrutiny.

Navigating Financial Losses

Akasa Air reported a loss of Rs 744 crore in its first year and anticipates losses of over Rs 1,600 crore for the current financial year. Dube underscored that these losses are part of the necessary investment in building a robust foundation for the airline, including expenses for personnel, safety, training, and technology. The initial financial outlay is seen as a step towards securing the airline’s future.