Rakesh Gangwal, the co-promoter of IndiGo Airlines, resigned from the carrier’s parent company InterGlobe Aviation and hence, from its Board of Directors, with immediate effect. He was serving as a non-independent, non-executive Director at the company.
In a letter written to the Board of Directors, Gangwal said that he would sell his stakes at the airline over a span of five years but may consider re-joining the board as a member at a later stage. His resignation came up hardly two weeks after Rahul Bhatia, the other promoter, took charge as IndiGo’s Managing Director.
“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. Accordingly, my current intention is to slowly reduce my equity stake in the company over the next five-plus years,” Gangwal mentioned in his letter.
Rakesh Gangwal and his family entities own 36.61% of the stake in InterGlobe Aviation. Based on the current market estimation, a valuation will value his stake at the company for Rs 29,900 crore. The other promoter Rahul Bhatia owns a 38% stake in InterGlobe Aviation.
“However, I am concerned about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information,” Gangwal said in his letter. He mentioned that he sees a prospective future for IndiGo, especially with the industry consolidation.
Spat Between IndiGo Promoters: Rakesh Gangwal vs Rahul Bhatia
There were severe opinions of differences between Gangwal and Bhatia, which first came out in public in July 2019 when Gangwal sought the intervention of the Securities and Exchange Board of India (SEBI) to address the alleged corporate governance violations at the airline. He sought to remove the clauses from Articles of Association that ceased the co-founders from buying publicly-listed shares in InterGlobe Aviation and potentially trigger an open offer for the remaining stakes of the company. A few changes made in the Articles of Association by IndiGo’s shareholders in December 2021 allow both partners to exit without the other partner exercising the right of first refusal. The dispute was later settled through arbitration, the details of which are not revealed to the public.