Thursday, November 29, 2018

Jet Airways may cede reins to Etihad, puts Tatas' proposal on back burner

Mumbai/New Delhi: Naresh Goyal-run Jet Airways is said to have agreed to give up its controlling stake, paving the way for Abu Dhabi-based Etihad Airways to increase its holding in the troubled Indian airline up to 49 per cent — the maximum permissible limit for a foreign entity.
At present, Etihad owns 24 per cent of Jet Airways, while Goyal holds a 51 per cent stake.
According to sources, founder and chairman Goyal, who has been reluctant to give up control, is now preferring Etihad’s offer to the ones being discussed with Tata Sons and other private equity funds.

“He has agreed to give up control. It was imperative,” said a person privy to the developments. If the deal materialises, Etihad will increase its stake to 49 per cent and, in return, the West Asian carrier will infuse cash through equity and loans.
“Etihad is likely to bring in another Indian entity, which too can invest alongside,” said a source. It is learnt that the airline is in talks with NRI businessman M A Yusuf Ali, the owner of Lulu Group, which owns hypermarket stores and shopping malls. Ali had joined the Air India board as an independent director in 2010. He has also invested in Cochin International Airport and sits on its board.
According to foreign direct investment (FDI) norms, an NRI is allowed to hold a 100 per cent stake in an airline. Ali didn't respond to multiple calls and text messages seeking response on the matter.
The shares of Jet Airways on Wednesday surged over 5 per cent amid reports that Goyal would sell a stake in the company. The stock soared 5.20 per cent to end at Rs 308.80 on the BSE.
29/11/18 Shrimi Choudhary & Arindam Majumder/Business Standard