Explained: How, after being on sale for 6 years, Pawan Hans is finally on its way to a new owner

In 2016, the government decided to disinvest its stake in Pawan Hans. One of the options that were explored was to allow ONGC to acquire the government’s stake in the company. However, this option did not find traction and, in 2018, ONGC too decided to offer its entire shareholding to the successful bidder identified in the government’s strategic disinvestment transaction, on the same price and terms as the government.

This disinvestment is the second major sale from the government’s aviation portfolio in the last 12 months — Air India went to the Tata Group in January this year.

What is Star9 Mobility?

The winning bidder for Pawan Hans — Star9 Mobility Pvt Ltd — is a three-way consortium between Big Charter Private Limited, Maharaja Aviation Private Limited, and Almas Global Opportunity Fund SPC. These three entities own 26%, 25%, and 49% stake in Star9 Mobility respectively.

The company was incorporated in October 2021 and, according to its Memorandum of Association, it intends to operate air support services to meet the requirements of the petroleum sector, including ONGC, in addition to operating tourist charters by helicopters, and “undertake any other operations that may be directed/requisitioned by the government”.

What is the background of Star9 Mobility’s owners?

Mumbai-based Big Charter Pvt Ltd runs the ‘flybig’ airline, which operates on UDAN routes, while Delhi-based Maharaja Aviation Pvt Ltd is a helicopter charter company. Almas Global Opportunity Fund is a Cayman Islands-based fund managed by Dubai-based Almas Capital.

Big Charter was founded by former pilot-turned-entrepreneur Sanjay Mandavia. Mandavia, along with a financial partner, had also bid for Jet Airways during the latter’s bankruptcy proceedings but lost out to the Jalan-Kalrock consortium. He also owns a company that operates flight simulators for Indian and global airlines.

Maharaja Aviation is a licensed non-scheduled operator registered with the DGCA. According to information available on the DGCA website, the company has three Robinson helicopters in its fleet.

How did the disinvestment process unfold?

The Cabinet Committee on Economic Affairs (CCEA) had approved strategic disinvestment of the government stake in Pawan Hans in October 2016. Thereafter, the government made three unsuccessful attempts at disinvestment.

In the first round, the Preliminary Information Memorandum (PIM) was issued in 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 in April 2018. Two bidders were found eligible, and were issued the Request for Proposal (RFP). Finally, a single, incomplete bid, non-compliant with the RFP, was received.

In the third round, the PIM was issued seeking EOIs in July 2019. However, of the four EOIs received, only one was found eligible, and the process was cancelled again.

In the fourth iteration, the government invited EoIs on December 8, 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, following which three financial bids were received.

Star9 Mobility emerged as the highest bidder quoting Rs 211.14 crore, while the other two bids were for Rs 181.05 crore and Rs 153.15 crore.

What happens here onward?

Now that the winning bid has been granted clearance by the Alternative Mechanism for Pawan Hans disinvestment that comprises Road Minister Nitin Gadkari, Finance Minister Nirmala Sitharaman, and Civil Aviation Minister Jyotiraditya Scindia, the government will issue the Letter of Award, which will be followed by signing of the Share Purchase Agreement and closing the transaction.

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