UB pledges Aventis stake to raise $40m for airline

BANGALORE: UB Holdings (UBHL) has raised $35-40m (Rs 160-185cr) for its subsidiary Kingfisher Airlines by pledging its entire minority holding in Aventis Pharma. The airline venture is also set to raise up to $150m overseas to meet the funding requirements for the next two years.“

We have raised funding for the airline venture by leveraging (pledging) our 10% stake in Aventis,” Ravi Nedungadi, president & CFO, UB Group, told ET. This is part of the $90-m the group has raised either by selling or leveraging on the non-core assets.

Earlier, UBHL sold its 10% stake in Bayer India and then exited South African brewing operations, United National Breweries (UNB), to fund the airline, which currently accounts for 8.7% market share in the Indian skies.

“We would sell our holding in Aventis at sometime, but we are not looking for it right now. We would like to take a closer look at the larger pharma industry developments and also Sanofi’s approach to Aventis (before deciding on the exit),” Mr Nedungadi added. It must be mentioned that UB Group has talked about exiting non-core assets, and the remaining investments in this list include Aventis, Mangalore Fertilisers & Chemicals and UB Engineering.

The UB official said Kingfisher Airlines, which has projected break even in FY08, was gearing up to raise up to $150m overseas through a structured finance arrangement. “We would require between $100/150m for the airline in the next two years.

We are looking at raising it overseas, and there will be better clarity on the matter in the next few weeks,” he added.“We are not keen on giving equity of the (airline) company at an early stage, and are looking at raising funds through a structured finance route,” Mr Nedungadi said.

While there is no clarity on the company’s fund raising channel, observers said it could look at securitisation on future receivables.