Strategic Buyer approved for disinvestment of Pawan Hans Limited

Sale of the Government of India’s whole stake in Pawan Hans Limited (PHL) (51 percent) and transfer of management control.

PHL is a Government of India-ONGC joint company that provides helicopter and air transportation services. 

The government of India owns 51 percent of the company’s stock, while ONGC owns the remaining 49 percent. ONGC has already decided to sell its full stake to the winning bidder in the Government of India’s strategic disinvestment deal, at the same price and terms as the government.

In October 2016, the CCEA approved the strategic disinvestment of the whole GoI stake in PHL. The transaction had already been attempted three times. The transaction had been attempted three times previously. The first round of the Preliminary Information Memorandum (PIM) requesting Expressions of Interest was released on October 13, 2017. (EOI).

Only one of the four EOIs received was judged to be eligible, and the transaction was cancelled. On 14 April 2018, a PIM was issued asking EOIs for the second round, and two bidders were judged qualified and issued a Request for Proposal (RFP). Finally, a single, incomplete proposal was submitted that was non-compliant with the RFP.
A PIM was published on July 11, 2019, soliciting EOIs for the third phase.

Pawan Hans Limited

Only one of the four EOIs received was judged to be eligible, and the procedure was completed in a timely manner.

This is the fourth iteration, and Expressions of Interest (EoI) will be accepted until December 8, 2020. There were seven expressions of interest, and four qualifying bids were chosen. Qualified bidders were asked to submit financial offers after conducting extensive research.

According to 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 front of the bidders.

All three offers were tested for legitimacy. The highest bidder, M/s Star9 Mobility Private Ltd, a consortium made up of M/s Big Charter Private Limited, M/s Maharaja Aviation Private Limited, and M/s Almas Global Opportunity Fund SPC, submitted a bid of Rs 211.14 crore, which was more than the Reserve Price.

Strategic disinvestment

The strategic disinvestment transaction was carried out through an open, competitive bidding process that was backed up by a multi-layered consultative decision-making mechanism that included the Inter Ministerial Group, the Disinvestment Core Group of Secretaries, and the empowered Alternative Mechanism The agreement has now reached its final stage.

The deal will be concluded after the Letter of Award is issued and the Share Purchase Agreement is signed.

In the last three years, PHL has been losing money (FY-19, FY-20 and FY-21). The company has a fleet of 42 helicopters, 41 of which are owned by it.

The company’s helicopters are on average over 20 years old, with three-quarters of them no longer being produced by the original equipment manufacturer.

With this privatization, the strategic buyer is intended to rejuvenate the company by replacing the aged fleet with new capital and improving the company’s performance. 

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