The Foreign Investment Promotion Board (FIPB) has deferred Jet Airways’ proposal to raise $400 million (Rs 1,770 crore) through qualified institutional placement (QIP).
It was deferred at an October 1 meeting after the civil aviation ministry said the airline would be breaching the foreign direct investment (FDI) guideline. Any Indian airline is not allowed more than 49 per cent FDI. This QIP issue would, went the objection, increase the FII holding in Jet to 53 per cent from 6.38 per cent and also bring down the promoters’ holding from 80 per cent to 42 per cent.
A Jet executive, on condition of anonymity, said the airline had asked for special permission, which they did not get. “We are hopeful to get the clearance in the next FIPB meeting,” he said.
Jet said the FDI exception was needed to keep the carrier flying. Instead, the ministry has already asked the airline to comply with FDI norms, to ensure the FDI holding remains below 49 per cent.
Naresh Goyal has majority control in Jet Airways through Tail Winds (TWL), incorporated in the Isle of Mann. TWL is a fully-Goyal family owned holding company. In August, after the annual general meeting of the airline, Goyal said the carrier has sought government’s permission to dilute up to a 20 per cent stake and had already applied to the FIPB.
GMR deferral
In another decision, FIPB also deferred GMR Airports Holding Ltd’s proposal to raise Rs 960 crore, till the source of the money was examined by the Department of Revenue. GMR wanted approval to issue compulsory convertible preference shares of this amount in favour of Mauritius-based Macquarie SBI Infrastructure Investments Ltd.
The investment was okayed by the Department of Industrial Policy and Promotion and the civil aviation ministry. The Department of Revenue, however, requested deferment. Macquarie SBI is to invest the fund through compulsory convertible preference shares of GMR Airports, a wholly-owned subsidiary of GMR Infrastructure Ltd. The shares will be converted into a maximum of 39.05 per cent of the share capital of GMR.
The accrued fund will be used by the company to acquire equity stake in Delhi International Airport Ltd and GMR Hyderabad International Airport from other group companies, including its parent company, GMR Infrastructure. GMR Airports own nine per cent stake in Delhi International Airport Ltd.