BENGALURU (Reuters) – One of the co-founders of Indian airline IndiGo is seeking to modify rules on the sale and purchase of shares by its main shareholders amid a bitter spat with his founding partner in the country’s largest carrier.
Rakesh Gangwal, who co-founded IndiGo with Rahul Bhatia, is seeking to delete certain rules in the company’s articles of association that give Bhatia the right of first refusal should Gangwal choose to sell his shares, a stock exchange filing showed.
Gangwal, an American and aviation industry veteran who spent years in senior roles at United Airlines and U.S. Airways, and Bhatia, who runs things on the ground in India, each control stakes of slightly less than 40% in InterGlobe along with their respective families, giving them both a major say in the carrier’s strategy.
Gangwal, who alleged violations of corporate governance rules at the parent group in July, also wants to remove an article that prevents either of the co-founders from buying publicly-listed shares in InterGlobe and potentially triggering an open offer for the rest of the company.
If the shareholders approve the amendments at a Jan. 29 extraordinary general meeting (EGM) requested by Gangwal, he or Bhatia could get a free hand to raise or cut stakes in the company.
Shares of InterGlobe, which fell early on Friday due to a spike in oil prices, climbed more than 6% from their lows before settling up 2.1%.
“The call for an EGM confirms that Rakesh Gangwal wants to sell his shares in the company,” said Sriram Subramaniam, head of InGovern – a shareholder advisory firm, adding it was unlikely the resolutions would pass as they required three-quarters of the shareholder vote.
“It will not be surprising if, once the resolutions are defeated, there are claims made of oppression and mismanagement,” said Subramaniam, adding this was likely a part of a ‘corporate fight playbook’.
IGE Group, controlled by Bhatia, did not immediately respond to Reuters’ request for comment.
If approved, the changes could allow either party to initiate hostile buying of the group’s shares in the event the dispute between the founders drags on, said Deepak Jasani, head of retail research at HDFC Securities.