Last month, India’s SpiceJet Ltd. completed the hive off of its cargo and logistics division ‘SpiceXpress’ into a separate entity, SpiceXpress and Logistics Private Limited.
The split was a strategic move to boost the growth of the carrier’s cargo business and provide a more streamlined and efficient service to its customers.
The hive off became effective from April 1, 2023 and it paves the way for SpiceXpress to raise funds independently.
The hive off would effectively strengthen SpiceJet’s balance sheet, wipe out a substantial portion of the Company’s negative net worth and unlock significant value for the Company and its shareholders.
What is a hive off?
“Hive off” is a term commonly used in business to describe the process of separating a part of a company’s operations or assets into a new legal entity.
This can be done for various reasons, such as to improve operational efficiency, to create a separate business unit for better management, or to focus on a specific line of business.
When a company “hives off” a business unit or assets, it means that it is creating a new entity that will operate independently from the rest of the company.
This new entity will have its own legal structure, management team, and financial statements.
The process of hiving off typically involves a transfer of assets, liabilities, and employees from the parent company to the new entity.
This can be done through a variety of legal structures, such as a spin-off, a split-off, or a carve-out.
Overall, hiving off is a strategic business decision that can help a company to streamline its operations, optimize its resources, and create value for its stakeholders.
Ajay Singh, Chairman & Managing Director, SpiceJet, said, “The separation of our cargo and logistics arm is a stepping stone in our growth story which shall unfold in the times to come.”
“SpiceXpress will provide greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth.”
“The decision to hive off SpiceXpress is in sync with our long-term business plan and will unlock significant valuation of the logistic business. Both SpiceJet and SpiceXpress have great potential and will complement each other well.”
“The hive off will not only enable SpiceXpress to raise cash independently, it will significantly reduce SpiceJet’s negative net worth. Having restructured over $100 million, outstanding dues to Carlyle Aviation Partner last month, the hive off will further strengthen and deleverage our balance sheet.”
SpiceJet is an Indian low-cost airline headquartered in Gurgaon, India. It was founded in 2005 and began operations in May of the same year.
SpiceJet operates on a network of more than 60 destinations across India, Asia, and the Middle East.
The carrier is an IATA-IOSA certified airline that operates a fleet of Boeing 737s, Q-400s & freighters and is the country’s largest regional player operating multiple daily flights under UDAN or the Regional Connectivity Scheme.
The majority of the airline’s fleet offers SpiceMax, the most spacious economy class seating in India.
About SpiceXpress and Logistics Private Limited
SpiceXpress and Logistics Private Limited is a subsidiary of SpiceJet Limited incorporated with an objective to undertake the business of providing a platform for dedicated goods transportation across globe and other allied services.
It is now well equipped with an extensive infrastructure, logistics and industry expertise to ensure hassle-free cargo and delivery services.
During the pandemic, SpiceXpress played a critical role in ensuring that vital trade routes between India and other countries remained intact.
With India’s transportation system coming to a virtual halt, SpiceXpress freighters and cargo planes took to the skies every single day to ferry a record supplies of relief material, medicines and medical equipment to and from wherever was required.