Jet grounds fund-raising plan on stake dilution worries

Mumbai: Jet Airways has decided to abandon its plans to raise $200 million (Rs 900 crore) by selling shares to foreign investors in the current fiscal after the company’s owner Naresh Goyal had second thoughts about a significant decline in his stake in the private airline.
The company was planning to increase its holding by selling shares to foreign institutional investors — such as pension funds and mutual funds — through the so-called qualified institutional placement (QIP) route, which is popular among investors because funds can be raised quickly.
“Jet is not going ahead with its QIP this fiscal. We will be deciding on fund-raising by the first quarter of the next financial year,” a senior Jet Airways official told ET. The airline may soon take a call on its fund-raising plan next fiscal, as Mr Goyal is reportedly meeting his team in London within this week.
The hesitation, which the company’s owners are experiencing, is because of the inevitable dilution in the promoter stake, which is currently at 80%. To raise $200 million, Mr Goyal will see his current stake come down by 14% to 66%, at the current share price of Rs 505, the closing price on Monday.
With the QIP option on the back-burner, the airline is considering other options to garner funds.
09/03/10  Manisha Singhal/Economic Times

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Categories: Foreign Mar 2010, Jet Airways Mar 2010