Rakesh Gangwal has announced his exit from the InterGlobe Aviation board of directors with immediate effect. He was a non executive, non independent director on the board. In a letter to the board members on Friday, the IndiGo co-founder said the decision is meant to facilitate plans to cut down his equity stake in the company and diversify his holdings. He did mention that future events may lead to a change of plans, and he shall consider returning to the board in future.
On his plans to reduce his stake in InterGlobe Aviation, the parent company of IndiGo airline, Gangwal wrote that it will be done in the next five years or more. “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. Accordingly, my current intention is to slowly reduce my equity stake in the Company over the next 5 plus years,” his letter reads.
“While new investors should benefit from the potential future growth in the company's share price, a gradual reduction of my stake should also allow me to benefit from some of the upside. Like any plan, future events may impact my current thinking,” he further adds.
Gangwal expresses concerns about “the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information (UPSI).”
“As you are aware, on an ongoing basis, the company provides us information and some of this is UPSI. Being a co-founder, co-promoter and director, this issue takes on great significance,” he points out.
“After considerable thought, I see only one clear path to address this issue. Regrettably, and effective immediately, I am stepping off the Board. Accordingly, I ask that no company information be shared with me that is UPSI, and having stepped down as a director, there should be no reason to share such information,” the letter tells the board.
Gangwal concludes the letter saying that he shall consider participating again as a board member sometime in the future.
Gangwal and his family hold 36.61% stake in InterGlobe Aviation, while Rahul Bhatia, another co-founder of IndiGo and its managing director, and his family hold 37.8% stake. The two partners had been at loggerheads after Gangwal approached various authorities to amend the company’s articles of association, alleging corporate governance violations. He had requested removal of the article that prevented co-founders from buying publicly listed shares in InterGlobe Aviation, and potentially trigger an open offer for the rest of the company.
In December last year, during an extraordinary general meeting, InterGlobe shareholders approved changes to the articles of association, including scrapping the rules prohibiting sale or transfer of shares to a third party.