Millennium Post

FIPB delays Jet’s 24% stake sale to Abu Dhabi’s Etihad

The Rs 2,058 crore deal struck by Jet Airways to sell 24 per cent of its stake to Abu Dhabi’s Etihad Airways was put on hold on Friday by the Government’s foreign investment approving agency which sought more clarity on control and ownership of the Indian airline.
‘It (the Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership,’ Economic Affairs Secretary Arvind Mayaram, who heads the Foreign Investment Promotion Board (FIPB),’ told reporters after a meeting here.
Market regulator Sebi and competition watchdog CCI have already sought clarifications from the premier private carrier on the transaction, to ensure that Etihad’s ownership powers in Jet remains in line with its 24 per cent stake in the company’s equity capital.

Asked about the development, Civil Aviation Minister Ajit Singh said that Sebi has raised some concerns and asked both the airlines to ‘rectify some parts of the pact’. ‘I don’t see any major problem for the deal,’ Singh said.
When contacted, Jet sources said they have already submitted the necessary clarifications to Sebi. It could not be ascertained when the FIPB would take up the Jet-Etihad proposal next.

Once the FIPB clears it, the matter would be sent to the Cabinet Committee on Economic Affairs (CCEA) for approval. All deals over Rs 1,200 crore have to be approved by the CCEA.
The Etihad-Jet deal is the largest foreign investment proposal in the aviation sector after the government allowed foreign carriers to pick up stake in Indian airlines last September.

In March, the FIPB had cleared Rs 81 crore investment proposal of AirAsia to set up a JV airline company, AirAsia India, with Tata Sons and another partner.
The Jet-Etihad deal assumes immense significance against the backdrop of the government looking to attract more foreign investment into the country.
Shares of Jet Airways on Friday soared by over 9 per cent ahead of the Foreign Investment Promotion Board meet to decide on the Rs 2,058 crore Jet-Etihad deal, the largest foreign investment in the Indian aviation sector.
Shares of the airline jumped 8.47 per cent to close the day at Rs 469.20 on the BSE. Intra-day, the scrip surged 9.21 per cent to Rs 472.40. On the NSE, the stock climbed 9.46 per cent to Rs 471.45.
In terms of volume, 9.32 lakh shares of the company changed hands on the BSE, while more than 29.46 lakh shares were traded on the NSE. Jet Airways plans to sell 24 per cent stake to Abu Dhabi-based Etihad.
For the quarter ended on March 31, 2013, Jet reported a net loss of Rs 495.53
crore against Rs 298.12
crore for the same period a year ago.
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