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'Jet may raise Rs 1.6k cr from stake sale'

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 03, 2012 22:02 hrs
A newly acquired Jet Airways Boeing 777-300ER aircraft sits on the tarmac at Mumbai airport

Jet Airways might raise Rs 1,600 from the sale of its 24 per cent stake to Etihad Airways, a government official said, as the deal is nearing closure following the Cabinet's approval of foreign direct investment.

The market capitalisation of Jet is Rs 4,800 crore. Going by this, if the deal is signed, 24 per cent of Jet's stake would fetch around 39 per cent of the market cap.

Jet might seek approval from the foreign investment promotion board and the deal could conclude by the end of this month, said the official, who asked not be identified.

Ragini Chopra, a spokeswoman at Mumbai-based Jet Airways, didn't immediately respond to a call on her cellphone and to an e-mail seeking comment on the stake sale. Etihad declined to comment on the government official's remarks.

Shares of Jet Air have surged 27 per cent since November 23 on speculation of a stake sale. Carriers in Asia's third-largest economy are considering equity alliances with global airlines for the first time after Prime Minister Manmohan Singh allowed as much as 49 per cent international investment in aviation.

Jet Air rose 5.3 per cent to Rs 554.70 at the close in Mumbai, before the official gave the information. The stock has more than tripled this year, compared with the 25 per cent jump in the benchmark Sensitive Index.

The carrier must sell at least a five percent stake by June to meet a rule capping the founders' holdings in companies at 75 per cent. Jet Air is selling and leasing back planes to free up cash to double loan repayments to $600 million in the year ending March 31, Chief Financial Officer Ravishankar Gopalakrishnan said November 5.

Etihad, the third-biggest Gulf carrier, said in October it was examining opportunities for investment in India after receiving feelers. Any purchase would be limited to a minority stake, Chief Executive James Hogan said October 16.

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