US billionaire Wilbur Ross will invest $80 million (Dh293m) in India's low-cost carrier SpiceJet after record fuel costs deepened its losses.
WL Ross & Co, owned by Wilbur Ross, will buy Rs3.45 billion (Dh293m) of foreign currency convertible bonds held by Istithmar, a leading investment house based in the UAE, and Goldman Sachs Group, Kishore Gupta, director of the New Delhi-based airline, was quoted as saying by Bloomberg news agency.
In Dubai, Istithmar officials were not available for comment. According to the SpiceJet web site, Istithmar owned 13.42 per cent shareholding in the carrier.
In December 2005, Istithmar raised its stake in SpiceJet to $50m. Istithmar also invested $12.5m in SpiceJet through foreign currency convertible bonds.
Istithmar's investment in SpiceJet, its first in India, reflected the group's long-term plans in the burgeoning aviation industry in India, said Sultan Ahmed bin Sulayem, Executive Chairman of Istithmar, while announcing the deal.
"We see immense potential in the Indian aviation sector. Istithmar is extremely bullish on low-cost carriers in India with the current spate of reforms and the gradual shift to a more open skies policy. In addition, the economy is embarking on a steady path of long-term growth and we see an opportunity for Istithmar to play a pivotal role in the development process," he said.
SpiceJet had raised $80m from Istithmar and Goldman Sachs through an FCCB issue in December 2005, which carried a coupon rate of around eight per cent, media reports had said. Istithmar paid a premium at Rs89.3 per SpiceJet share then.
SpiceJet used the money to make pre-delivery payment to Boeing Co for 20 aircraft it had ordered.
The number
13.42%: The stake held by Istithmar in India's SpiceJet