IndiGo's co-promoter Gangwal quits; to gradually reduce stake

New Delhi, February 18

IndiGo’s co-promoter Rakesh Gangwal on Friday resigned from the Board of directors of parent company InterGlobe Aviation, stating that he will gradually reduce his equity stake in the airline over the next five years.

Gangwal and his related entities own around 37% stake in this company. Rahul Bhatia and his related entities own around 38% in InterGlobe Aviation.

Alleges corporate governance lapses

• IndiGo’s co-founder Rakesh Gangwal and his related entities own around 37% stake while Manging Director Rahul Bhatia and his related entities own around 38% stake in InterGlobe Aviation which runs the airline
• The feud between the two promoters — Bhatia and Gangwal — came into public domain after Gangwal had written to SEBI in July 2019 and sought its intervention to address the alleged corporate governance lapses at the company

“I have been a long-term shareholder in the company for more than 15 years and it’s only natural to someday think about diversifying one’s holdings,” Gangwal said in his letter to the Board members. “Accordingly, my current intention is to slowly reduce my equity stake in the company over the next five plus years,” he added.

At an extraordinary general meeting held on December 30, IndiGo shareholders had approved a special resolution to remove a clause from the company’s Articles of Association (AoA) which gave its two promoters the power of right of first refusal when one of them wanted to sell his shares.

The passage of the special resolution paved the way for resolution of a dispute that has been going on between Gangwal and Bhatia since 2019. In his letter on Friday, Gangwal said he continues to be a big believer in the long-term prospects of IndiGo and more so now with the industry consolidation underway.

“Under this backdrop and in the long-term, Indian aviation should prosper, as in various other parts of the world,” he noted.

While new investors should benefit from the potential future growth in the company’s share price, a gradual reduction of his stake will also allow him to benefit from some of the upside, he mentioned. “Like any plan, future events may impact my current thinking,” he noted.

However, he said he is concerned about the optics of reducing his equity stake even though such transactions can only be undertaken when he does not have any unpublished price sensitive information (UPS). —