CHENNAI: The Coimbatore-based, all business class start-up airline, Paramount Airways has quietly sealed its first round of venture funding with Kotak Venture Fund investing around $14 million.
According to sources familiar with the development, Kotak will pick up a "minority stake" (the exact stake the fund picks up is kept under wraps). The valuation of Paramount for the purpose of this deal is being pegged at around $125 million.
M Thyagarajan, MD, Paramount Airways abstained from commenting on the transaction.
Sources also said Kotak was preferred, factoring in future fund related activities that the airline might want to tap at a future date.
"Actually we are adequately funded, our internal accruals take care of our operational cost. The funds raised now will be used to acquire six Embraer aircraft over the next six months," official sources said.
The deal assumes significance from the standpoint that two other airline deals are hanging on (Air Sahara and Spice Jet) without closure.
Veda Corporate Advisors advised Paramount Air on the transaction. It might be noted here that Bennett, Coleman & Company (publishers of The Times of India and The Economic Times) have picked up 2% stake in the airline a few days back..
Of the six new aircraft planned, three will be Embraer 170 (70 seats all business class) and three Embraer 175 (11 first class and 64 business class). Paramount operates flights between Coimbatore, Chennai, Kochi and New Delhi. ... ... It is promoted by the illustrious Karumuttu family of Madurai in South Tamil Nadu. Bank of Madura (which is now under the belt of ICICI Bank) was promoted by this family.