Turbulence hits Jet Airways’ fundraising plan again

Naresh Goyal-owned Jet Airways’ bid to raise $400 million through a qualified institutional placement (QIP) has been scuttled again.
According to three people privy to the development, the Foreign Investment Promotion Board (FIPB) has rejected the airline’s request for a relaxation of the foreign direct investment (FDI) limit of 49% to be able to get the funds in.
The civil aviation ministry had put two conditions to Jet’s fundraising plan. First, the carrier must bring down its FDI level within the sectoral cap of 49% in three years after the QIP. Second, the control of the airline should not be in foreign hands.
Jet had sought an exception to these rules, which has been turned down by the FIPB.
Industry sources say this is the third or fourth time Jet’s proposal has been rejected in the last 6-7 months. The last time it was rejected, in October 2010, the government had sought more clarification on the QIP issue.
Bringing down FDI level is easier said than done, considering Goyal holds a whopping 79.9% in Jet through Tail Winds, which is registered in the Isle of Man. Foreign institutional investors hold 6.55%, domestic institutional investors 9.19%, retail investors 3.35% and corporate bodies 0.91% stake in the company.
28/01/11 Neha Rishi/Daily News & Analysis

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Categories: Jet Airways Jan 2011