Indian airline SpiceJet‘s shares were recovering after they went down over 5% during early trade on Tuesday, after the company kicked off its qualified institutional placement to raise up to ₹3,000 crore.

What Happened: The cash-strapped carrier approved and authorised the opening of the issue on Monday, the company said in a press release. The floor price of the QIP was fixed at ₹64.79 per equity share, which represents a discount of nearly 17% from Monday’s closing price.

The company further added that it may consider a discount of up to 5% on the floor price for the issue. Reports said that that the indicative issue price for the QIP is said to be ₹61.6 per share, which is a further 20.8% discount from its last closing price.

Last week, the company held a postal ballot to pass a special resolution for raising funds. The fund raise has reportedly received a good response from domestic and well as international investors, with offers exceeding ₹3,000 crore.

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Earlier this month, global brokerage HSBC cut SpiceJet’s target price to ₹26, and issued a “reduce” call for the stock. It noted that the funds raised through the QIP will likely be used to cover ongoing losses and meet working capital requirements due to the current shortage of aircraft, dashing investors' hopes. Earlier, the airline's stocks rallied on the news of fresh infusion of funds.

The company has been caught in regulatory crosshairs from the past few months. At the end of August, the Directorate General of Civil Aviation put the airline under enhanced surveillance with increased spot checks and night-time surveillance to ensure operational safety. 

Price Action: SpiceJet’s shares partially recovered to trade 2.615 lower ₹75.76 on Tuesday.

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