Pawan Hans disinvestment: Strategic Buyer Star9 Mobility Pvt Ltd's highest bid approved

The Alternative Mechanism, empowered by the Cabinet Committee on Economic Affairs, comprising Union Minister for Road Transport and Highways Nitin Gadkari, Union Minister for Finance & Corporate Affairs Nirmala Sitharaman, and Union Minister of Civil Aviation Jyotiraditya M. Scindia, has approved the highest bid of M/s Star9 Mobility Private Ltd for sale of entire GoI’s shareholding (51% of shareholding) of Pawan Hans Limited (PHL) and transfer of management control.

PHL is a joint venture between the Government of India and ONGC that provides helicopter and air mobility services. The Government of India owns 51% of the specific shares, while ONGC owns the remaining 49%. ONGC has already decided to sell its entire holding to the successful bidder in the Government of India's strategic disinvestment deal, at the same price and terms as the Government of India. 

In October of 2016, the CCEA approved the strategic disinvestment of the Government of India's entire stake in PHL. The transaction had already been attempted three times. On October 13, 2017, the Preliminary Information Memorandum (PIM) soliciting Expressions of Interest was issued in the first round (EOI). Only one of the four EOIs received was determined to be eligible, and the transaction was cancelled.

On April 14, 2018, a PIM was issued asking EOIs for the second round, and two bidders were considered eligible and were issued a Request for Proposal (RFP). Finally, a single, incomplete bid was received that was non-compliant with the RFP. On July 11, 2019, a PIM was issued soliciting EOIs for the third round. Only one of the four EOIs received was judged to be eligible, and the procedure was cancelled. This is the fourth iteration with a request for Expressions of Interest (EoI) invited on December 8, 2020. Seven Expressions of Interest (EoI) were received, and four eligible bids were shortlisted. Qualified bidders were requested to submit financial bids after thorough due diligence. There were three financial bids received.

Star9 Mobility to buy 51% stake in Pawan Hans

According to the process, the Reserve Price for the sale of PHL's 51 percent equity was set at Rs 199.92 crore, based on expert valuation (transaction adviser and asset valuer). Following that, the three bids were opened in the presence of the bidders. The validity of all three offers was determined. M/s Star9 Mobility Private Ltd, a consortium comprised of M/s Big Charter Private Limited, M/s Maharaja Aviation Private Limited, and M/s Almas Global Opportunity Fund SPC, was the highest bidder, presenting a bid of Rs 211.14 crore, which was higher than the Reserve Price. The second and third bids were for Rs 181.05 crore and Rs 153.15 crore, respectively. The Government has accepted M/s Star9 Mobility Private Limited's financial bid after careful consideration.

The strategic disinvestment transaction was carried out through an open, competitive bidding procedure that was supported by a multi-layered consultative decision-making framework that included the Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment, and the empowered Alternative Mechanism. The transaction has now progressed to the final stage. The Letter of Award will be issued, the Share Purchase Agreement will be signed, and the transaction will be closed.

Pawan Hans Limited hit by financial crisis

Pawan Hans Limited (PHL) has been incurring losses in the last three years (FY-19, FY-20, and FY-21). The company has a fleet of 42 helicopters, 41 of which are owned by the company. The helicopters held by the company are on average over 20 years old, and three-quarters of them are no longer manufactured by the original equipment manufacturer. The strategic buyer is expected to rejuvenate the company by replacing the aging fleet with new capital and improving the company's performance as a result of the privatisation.

Image: Twitter/@AaiKmbAirport