 "Corp affairs, civil aviation ministries raise concerns")
Jet Airways and Etihad might have to re-work the ownership structure proposed in the Rs 2,058-crore deal with key ministries including civil aviation and corporate affairs, raising concerns over ultimate control of the domestic carrier.
The issues were voiced at the Foreign Investment Promotion Board (FIPB) meeting on Friday, sources said.
<B>Decision deferred</B><BR>
The decision on the deal, struck by Jet Airways to sell 24 per cent of its stake to Abu Dhabi’s Etihad Airways, was deferred by the FIPB.
The deal is the largest foreign investment proposal in the sector after the government allowed foreign carriers to pick up stake in Indian airlines last September.
Concerns have been primarily raised on the proposed ownership and control structure of the domestic airlines.
Sources said capital market regulator Securities and Exchange Board of India (Sebi), fair trade regulator Competition Commission of India and the department of industrial policy and promotion also had reservations about the transaction.
Major concerns on ultimate control of Jet Airways after the deal have been raised by various ministries.
After the FIPB meeting on Friday, Economic Affairs Secretary Arvind Mayaram had said: “It (Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership.”
However, Civil Aviation Minister Ajit Singh had said he did not “see any major problem for the deal”.
Sources had said following Sebi’s concerns, the deal was reworked with changes in the share-purchase agreement and articles of association of the company to ensure effective control of the company was not transferred to Etihad.
Under the Jet-Etihad deal, after the transactions are cleared by the regulatory authorities, Jet Airways promoter Naresh Goyal will directly own 51 per cent in the airline, while Etihad will own 24 per cent.
The foreign investment policy for civil aviation, revised last September, allows foreign airlines and foreign institutional investors to invest up to 49 per cent in an Indian airline. Non-resident Indians are already allowed 100 per cent investment.
Ahead of the Foreign Investment Promotion Board meet, Jet Airways yesterday named Australian aviation veteran Gary Kenneth Toomey as its new chief executive officer in place of Nikos Kardassis, who resigned on May 31.
WHO’S THE MASTER?
The issues were voiced at the Foreign Investment Promotion Board (FIPB) meeting on Friday, sources said.
<B>Decision deferred</B><BR>
The decision on the deal, struck by Jet Airways to sell 24 per cent of its stake to Abu Dhabi’s Etihad Airways, was deferred by the FIPB.
The deal is the largest foreign investment proposal in the sector after the government allowed foreign carriers to pick up stake in Indian airlines last September.
Concerns have been primarily raised on the proposed ownership and control structure of the domestic airlines.
Sources said capital market regulator Securities and Exchange Board of India (Sebi), fair trade regulator Competition Commission of India and the department of industrial policy and promotion also had reservations about the transaction.
Major concerns on ultimate control of Jet Airways after the deal have been raised by various ministries.
After the FIPB meeting on Friday, Economic Affairs Secretary Arvind Mayaram had said: “It (Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership.”
However, Civil Aviation Minister Ajit Singh had said he did not “see any major problem for the deal”.
Sources had said following Sebi’s concerns, the deal was reworked with changes in the share-purchase agreement and articles of association of the company to ensure effective control of the company was not transferred to Etihad.
Under the Jet-Etihad deal, after the transactions are cleared by the regulatory authorities, Jet Airways promoter Naresh Goyal will directly own 51 per cent in the airline, while Etihad will own 24 per cent.
The foreign investment policy for civil aviation, revised last September, allows foreign airlines and foreign institutional investors to invest up to 49 per cent in an Indian airline. Non-resident Indians are already allowed 100 per cent investment.
Ahead of the Foreign Investment Promotion Board meet, Jet Airways yesterday named Australian aviation veteran Gary Kenneth Toomey as its new chief executive officer in place of Nikos Kardassis, who resigned on May 31.
WHO’S THE MASTER?
- The Securities and Exchange Board of India, the Competition Commission of India and the department of industrial policy and promotion are concerned primarily about the ownership and control structure of the domestic airlines
- The Foreign Investment Proposal Investment Board has deferred a decision on the deal till the companies provide more details
- Civil Aviation Minister Ajit Singh has said he does not “see any major problem for the deal”