Govt approves Star9 Mobility's bid of Rs 211 cr for 51 pc stake sale in Pawan Hans Limited

An Alternative Mechanism empowered by the Cabinet Committee on Economic Affairs, comprising Minister for Road Transport and Highway Nitin Gadkari, Minister of Finance & Corporate Affairs Nirmala Sitharaman and Minister of Civil Aviation Jyotiraditya Scindia approved  Star9 Mobility Private Ltd for the sale of government's entire 51 percent of shareholding in Pawan Hans Limited.

PHL is a joint venture of the Government of India and ONGC providing helicopter and aero mobility services.

The government holds 51 percent of the shares in the company and ONGC holds the balance 49 percent.

ONGC has earlier decided to offer its entire shareholding to the successful bidder identified in the government strategic disinvestment transaction, on the same price and terms as the government.

CCEA approved the strategic disinvestment of the entire government's stake in PHL in October 2016.

The transaction had been attempted thrice in the past.

In the first round, the Preliminary Information Memorandum (PIM) was issued on 13 October 2017 seeking Expressions of Interest (EOI).

Out of four EOIs received, only one was found eligible and the transaction was cancelled.

In the second round, PIM was issued seeking EOIs on 14 April 2018, and two bidders were found eligible and were issued the Request for Proposal (RFP).

Finally, however, a single, incomplete bid non-compliant with the RFP was received. In the third round, PIM was issued seeking EOIs on 11 July 2019.

Out of four EOIs received, only one was found eligible and the process was cancelled.

This is the fourth iteration with request for Expressions of Interest (EoI) invited on 8 December 2020.

Seven EoIs were received and four interested bidders were shortlisted as qualified bidders.

After detailed due diligence, the qualified bidders were invited to submit financial bids. Three financial bids were received. 

As per extant procedure, the Reserve Price for the sale of 51 percent shareholding of PHL was fixed at Rs 199.92 crore, on the basis of valuation carried out by experts (transaction adviser and asset valuer).

Thereafter, the three bids were opened in the presence of the bidders.

All three bids were found to be valid.

Star9 Mobility Private Ltd, a consortium of Big Charter Private Limited, Maharaja Aviation Private Limited, and Almas Global Opportunity Fund SPC; emerged as the highest bidder quoting Rs 211.14 crore, which was above the Reserve Price.

The other two bids were for Rs 181.05 crore and Rs 153.15 crore.

Following due deliberations, the financial bid of Star9 Mobility Private Limited has been accepted by the government.

The strategic disinvestment transaction was implemented through an open, competitive bidding process supported by a multi-layered consultative decision-making mechanism involving the Inter-Ministerial Group, Core Group of Secretaries on Disinvestment, and the empowered Alternative Mechanism.

The transaction now moves to the concluding stage.

The next steps are issuing of the Letter of Award, signing of the Share Purchase Agreement and closing of the transaction.

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 with 41 of them owned by the company.

The owned helicopters have an average age of over 20 years and three-fourths of them are presently not being manufactured by the original equipment manufacturer.

With this privatization, the government hopes that the strategic buyer will revitalize the company by replacing the aging fleet through the infusion of fresh capital and improving the performance of the company.