Rakesh Gangwal, IndiGo’s co-promoter, resigned from InterGlobe Aviation’s board of directors on Friday, indicating that he will progressively lower his investment in the airline over the next five years.
Around 37% of the corporation is owned by Gangwal and his affiliated organizations. Rahul Bhatia and his affiliated organizations possess roughly 38 percent of InterGlobe Aviation.
“I have been a long-term shareholder in the firm for over 15 years, and it’s only normal to consider diversifying one’s assets at some point,” Gangwal wrote to the board members.
“As a result, my present plan is to gradually reduce my equity share in the firm over the next five to seven years,” he said.
IndiGo shareholders accepted a special resolution to remove a clause from the company’s Articles of Association (AoA) that granted its two promoters the power of the first refusal when one of them wished to sell his shares at an extraordinary general meeting held on December 30.
The extraordinary ruling cleared the way for a resolution of a dispute between Gangwal and Bhatia that has been ongoing since 2019.
Gangwal wrote in his letter on Friday that he is optimistic about IndiGo’s long-term potential, particularly now that the sector is consolidating.
“Against this backdrop, Indian aviation, like aviation in other areas of the world, should grow in the long run,” he said.
While new investors should profit from the company’s possible future rise in share price, he said that a gradual reduction of his own will allow him to gain from some of the upsides as well.
“Future events, like any plan, may influence my current thinking,” he said.
He is concerned, however, about the optics of lowering his stock holding, even though such transactions may only be carried out when he has no unpublished price-sensitive information (UPS).
“As you are aware, the corporation supplies us with information regularly, some of which comes from UPS. “As a co-founder, co-promoter, and director, this topic is really important to me,” he continued.
After much consideration, Gangwal believes there is only one clear approach to take to fix the problem.
“Unfortunately, and with immediate effect, I am stepping down from the Board of Directors.” As a result, I request that no UPS corporate information be shared with me, as I have stood down as a director and there should be no reason to do so,” he stated.
“I will consider serving as a board member again someday,” he continued.
The disagreement between the two promoters — Bhatia and Gangwal — became public after Gangwal wrote to market regulator Sebi in July 2019 seeking its intervention to remedy the company’s alleged corporate governance violations, which the Bhatia group has denied.
Both promoters filed a dispute resolution request with the London Court of International Arbitration in 2019.
The court issued its ruling on September 23 of last year, prompting the request for the aforementioned extraordinary general meeting to change the company’s Articles of Association.