Based on Tuesday’s closing price, the deal is happening at a 31.7% premium.
The deal sets a valuation benchmark for further investment in Indian airlines, with budget carrier SpiceJet Ltd frequently the subject of stake sale reports.
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Spicejet rose 18.24%, while Kingfisher Airlines Ltd gained less than 1%.
Citigroup has raised India's Jet Airways Ltd target price to 766 rupees from 545 rupees previously, while maintaining its' buy' rating, after the deal.
The investment bank says the cash infusion of $450 million gives Jet the leeway to pay down high cost debt while also being strategic for its international operations.