United Breweries (Holdings) is planning to sell about 20% stake in its consolidated aviation business—comprising Kingfisher Airlines and Air Deccan—to private equity investors, ET report says. It hopes to raise around $ 250 million through the equity dilution. Four private equity giants, including Cerberus Capital, TPG and Blackstone, have initiated talks. Cerberus is believed to be the front-runner.

The stake is being sold in a subsidiary of UB (Holdings), which owns 83% of Kingfisher Airlines and 100% of Kingfisher Radio. Kingfisher Radio, in turn, holds 26% in Deccan Aviation, the parent of the low-cost airline. The proposed open offer, if successful, will take Kingfisher Radio’s stake in Deccan Aviation to 46%.

The UB Group denied any immediate plan to induct a financial investor. The group insisted that “it was not in a tearing hurry” to bring in a financial investor, adding that de-leveraging could be done in 18-24-months.

Edelweiss, currently managing the open offer on behalf of Kingfisher Radio, is believed to have got the mandate for scouting for PE investors as well. Around 55% of UB (Holdings) is held by Vijay Mallya and his investment companies, 25% by foreign institutional investors and 10% by the public.

On Friday, UB Holdings shares rose 1.4% to Rs 675. The stock has gained around 16% over the last month from Rs 580 on June 21, and its market-cap is hovering around $ 1 billion.

Once the open offer is successfully completed, valuations of UB (Holdings) would shoot up considerably, over $ 1.5 billion. The subsidiary then will be valued over $ 1 billion, 20% of which, along with premium, would come to 0 million.

The UB Group has already raised Rs 550 crore as debt from IDFC, HDFC and IL&FS for its purchase of Deccan Aviation. It is currently in the process of raising another Rs 430 crore to fund the open offer.

This will take its debt to around Rs 1,000 crore. The plan is to pay back the expensive debt through private equity funds. UB is waiting for Sebi’s clearance for the open offer at Rs 155 per share. The group is confident of getting participation from major shareholders, including ICICI Bank and Capital One.

UB (Holdings), the umbrella investment holding entity of the group, has been funding Kingfisher Airlines’ operations and losses since its inception two years ago. The airline has reportedly made a cumulative loss of over Rs 500 crore till date. It is believed that the seed money for the airline business was unlocked from the group’s substantial real estate holdings in Bangalore.