Jet Airways to sell stake to Etihad for over Rs 2000 crore

NEW DELHI: In a major Foreign Direct Investment ( FDI) move in the aviation sector, Jet Airways on Wednesday agreed to sell 27.3 million shares to Etihad Airways. Jet Airways will sell the shares at Rs 754.73 per share. ET Now sources said that the Jet-Etihad transaction stands at around Rs 2000 crore.

In an intimation to the stock exchanges Jet Airways announced that the Board of Directors of the company approved, subject to compliance with applicable laws and regulations and other necessary approvals, the issuance, by way of a preferential allotment 27.3 million equity shares (24% of Jet’s equity) of the face value of Rs. 10/- (Rupees Ten only) to Etihad Airways PJSC at a price of not less than Rs. 754.7361607.

The approval of the shareholders for such issuance and allotment will be sought at an Extraordinary General Meeting to be held in this regard, Jet informed the stock exchanges.

The Board of Directors has granted approval for the Company and Etihad PJSC to enter into inter alia, the Investment Agreement in relation to such issuance and allotment and other documents incidental thereto.

The said preferential allotment is subject to various conditions precedent including regulatory approvals.

The number of Jet shares to be alloted to Etihad represents nearly 32 percent of Jet Airways' share capital. The deal, subject to regulators and shareholders approval, would be the first since India relaxed ownership rules in September and allowed foreign carriers to buy up to 49 percent in local carriers, which are battling stiff competition and high operating costs.

Commenting on the deal which is being called a game-changer for the sector, Kapil Kaul of CAPA told ET Now, "The deal will give Jet the capital that it requires right now. Jet will get new financing opportunities."

The deal is on expected lines post regulatory approvals, he added. "This is a game changing deal for the Indian aviation sector," he said.

Since the government relaxed ownership rules and allowed foreign airlines to buy up to 49 per cent stake in Indian airlines, the Abu Dhabi-based carrier has been in talks a stake in Jet. A few weeks ago, Etihad paid Jet $70 million for the latter's three slots at London's Heathrow Airport.

(With inputs from Manisha Singhal)