Conditional nod to Jet's qualified institutional placement issue

New Delhi /Mumbai: The Cabinet Committee on Economic Affairs (CCEA) on Thursday gave its approval to the proposal of Jet Airways seeking permission to raise $400 million or Rs 1,900 crore through a qualified institutional placement (QIP) issue.
Though this would enable the airline to raise much needed cash, questions over foreign direct investment (FDI) guideline violations through this route remain unanswered.
A Jet spokeswoman declined to comment, saying the company has received nothing in writing from the government till now.
Another senior official, who did not want to be named, said the company had not yet decided how much stake would be offloaded to raise the money.
"The QIP is expected to achieve a price of Rs 350-400 per share," the person said.
In its current form, Jet's proposal involves issue of fresh shares to domestic and foreign institutional investors (FIIs) and this move could raise FDI in the airline beyond the permitted 49% cap for scheduled air transport services.
Officials in the ministry of civil aviation said the approval is conditional to Jet adhering to the 49% cap within the next three years.
They have also put a condition that Jet's promoter Naresh Goyal should not sell off his stake in the airline under the guise of a QIP issue; nor should the controlling structure get altered.
The airline's control must remain in the hands of existing promoters even after the issue of fresh shares to foreign investors.
25/12/09 Sindhu Bhattacharya & Ramiya Bhas/Daily News & Analysis

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Categories: Jet Airways Dec 2009