IndiGo co-founder Rakesh Gangwal has stepped down from the board of InterGlobe Aviation and will sell his holdings in the airline operator over about five years, he said on Friday.
Gangwal’s letter to the board came barely two weeks after his partner, Rahul Bhatia, with whom he has sparred for long, assumed the position of managing director. That came a month after a change in the articles of association, allowing one partner to leave without the other exercising the right of first refusal.
In a filing with stock exchanges, the company said Gangwal tendered his resignation from the board on Friday with immediate effect. “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,” Gangwal said.
“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about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information,” he said.
Gangwal and his family-owned 36.61% as of December in the company that operates India's biggest airline by market share. Based on InterGlobe’s closing share price of ₹ 2,120. 30 on the BSE Friday, the stake is worth ₹29,900 crore. On February 4, the other cofounder, Bhatia, assumed the position of the company’s managing director. It never had an MD before. Ronojoy Dutta is the CEO of the airline.
The previous month, shareholders approved a resolution seeking an amendment to the articles of association, which earlier gave one founder the first right to purchase the other’s shares if the latter decided to sell. The terms were changed after years of the feud between Bhatia and Gangwal, who had stopped participating in the airline's operational and financial decisions.
A legal battle between the promoters began on July 8, 2019, when Gangwal wrote to the Securities and Exchange Board of India, the Prime Minister’s Office and the finance ministry, seeking intervention on various corporate governance issues and the Bhatia Group’s control of the airline.
Gangwal had sought amendments to the AoA to remove rights of Bhatia’s IGE Group on the airline and raised past allegedly related-party transactions and refusal to hold an extraordinary general meeting when he had requested, among other issues. Several cases were filed in India, the US and London, culminating in the extraordinary general meeting this year when the articles were amended, smoothening the way for Gangwal’s exit.