Captain in fresh talks with PEs to fund cargo biz

Mithun Roy MUMBAI

WITH the equity markets reviving and boosting industry valuations, the pioneer of low-cost flying in India, Captain GR Gopinath, is understood to be resuming talks with private equity (PE) players to part-finance his latest venture—airline cargo business. The consultation process for potential buyers has once again started, and Mr Gopinath is learnt to be seeking Rs 200 crore for a 25% stake in his cargo company called Deccan 360, said people close to the development. Talks are on with one European and two US-based PE firms, pegging the enterprise valuation of the cargo company at Rs 800 crore. Mr Gopinath had postponed similar talks in September due to low valuations.

Hoping for better valuations

WHEN contacted by ET, Mr Gopinath said: “Now, I can ask private equity players my kind of price for better valuation of the company as the market and the economy are in a revival mode. I can even time it when to bring investors on board as the business is already launched and flying.”

He declined to share the names of the private equity firms with whom he is negotiating but people in the know say Singapore Cargo, IBM Ventures and Intel Capital have shown interest in Mr Gopinath’s airline cargo business. ET couldn’t independently confirm the private equity firms.

Earlier, Mr Gopinath had invested about Rs 125 crore and now needs to raise additional funds to run the business. In the last few months, Mr Gopinath has offloaded his stake in Kingfisher Airlines to 1.75%, from the 9% he owned in June 2008.

Deccan Express Logistics will be pitching against est a b l i s h e d players such as Blue Dart, Gati, TNT Express and First Flight. The $625-million domestic express cargo market is expected to grow at 20% over the next five years.

The company plans to hire 5,000 people in next five years. In the first phase, it has plans to appoint 100 franchisees.

It has also signed a memorandum of understanding with GMR Group for setting up express cargo operations at Delhi and Hyderabad airports, which, along with the hub in Nagpur, will form an extensive multimodal storage, transportation and delivery network.

Mr Gopinath earlier had founded India’s first low-cost carrier, Air Deccan, which was later taken over by Kingfisher Airlines and rechristened as Kingfisher Red. Nearly two years ago, Mr Gopinath sold the commercial aviation business Deccan Aviation to Vijay Mallya’s Kingfisher Airlines.

FIRST FLIGHT: Funds to help Gopinath chart new route