Air India privatisation: Homecoming for AI as Tata Sons wins bid for Rs 18,000 cr

  • The second highest bid was placed by a consortium led by SpiceJet Chairman and Managing Director Ajay Singh for an enterprise value of Rs 15,100 crore
  • Both the bids were above the reserve price of Rs 12,906 crore

New Delhi: The Air India privatisation/disinvestment process has come to a close with its homecoming as the government has accepted the Rs 18,000-crore bid submitted by Tata Sons. In an official statement released on Friday evening, the Ministry of Finance said, “The Cabinet Committee on Economic Affairs  (CCEA)-empowered Air India Specific Alternative Mechanism (AISAM)… approved the highest price bid of M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd, for the sale of 100 percent equity shareholding of Government of India in Air India along with equity shareholding of Air India in AIXL and AISATS.”

The mechanism comprised of Minister for Home Affairs Amit Shah, Minister for Finance and Corporate Affairs Nirmala Sitharaman, Minister for Commerce and Industry Piyush Goyal and Civil Aviation Minister Jyotiraditya Scindia, the statement said.

Air India privatisation: Winning bid is for Rs 18,000 cr

The winning bid is for Rs 18,000 crore as Enterprise Value (EV) consideration for Air India (100 percent shares of AI along with AI’s shareholding in AIXL and AISATS), said the statement. It added that the transaction does not include non-core assets, including land and building, valued at Rs 14,718 crore, which are to be transferred to the government’s Air India Asset Holding Limited (AIAHL).

The second highest bid was placed by a consortium led by SpiceJet Chairman and Managing Director Ajay Singh for an EV of Rs 15,100 crore. Both the bids were above the reserve price of Rs 12,906 crore. “In line with the approved procedure for strategic disinvestment, a reserve price was fixed after the receipt of sealed financial bids for the transaction, based on valuation using methodologies as per the established process. After the independent fixation of Reserve Price, the already received sealed financial bids were opened in the presence of the bidders,” said the statement.

Tata Sons to sign LoI, SPA by Dec 2021

The next step will be to issue the Letter of Intent (LoI) and then sign the Share Purchase Agreement, following which, the conditions precedent would need to be satisfied by the successful bidder, the company and the government. It is expected that the transaction will be completed by December 2021.

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“The entire disinvestment process has been carried out in a transparent manner, with due regard to confidentiality of the bidders, through multi-layered decision making involving Inter-Ministerial Group (IMG), Core Group of Secretaries on Disinvestment (CGD) and the empowered Air India Specific Alternative Mechanism (AISAM) at the apex Ministerial level. Transaction Adviser, Legal Adviser, Asset Valuer, professionals in their respective fields, have supported the entire process,” the Ministry of Finance said.


The process for disinvestment of Air India and its subsidiaries commenced in June 2017 with the ‘in-principle’ approval of CCEA. The first round did not elicit any Expression of Interest (EoI). The process re-commenced on January 27, 2020 with the issue of Preliminary Information Memorandum (PIM) and request for Expressions of Interest (EOI). The original construct, as per the January 2020 PIM, envisaged pre-determined, fixed amount of debt to be retained in AI (with balance to be transferred to Air India Asset Holding Limited (AIAHL) and the sum of certain identified current and non-current liabilities (other than debt) to be retained in AI and AIXL to be equal to the sum of certain identified current and non-current assets of AI and AIXL (excess liabilities to be transferred to AIAHL).

The timelines had to be extended on account of the situation arising from the COVID-19 pandemic. In view of the excessive debt and other liabilities of Air India arising out of huge accumulated losses, the bidding construct was revised in October 2020 to Enterprise Value (EV) to allow prospective bidders an opportunity to resize the balance sheet and increase chances of receiving bids and competition. The EV construct allowed the bidders to bid on the total consideration for equity and debt instead of a pre-determined, fixed debt with minimum cash consideration of 15 percent for equity. As per both the original and revised construct, all non-core assets (land, buildings, etc) are to be transferred to AIAHL and are therefore not a part of the transaction. It has been ensured that the interest of the employees and retired employees would be taken care of.

The transaction saw keen competition with seven EOIs being received in December 2020. Five of the bidders, however, had to be disqualified as they could not meet the requirements set out in the PIM/EoI, even after allowing them an opportunity for clarification, said the Finance Ministry. 

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