|Chennai||Rs. 27770.00 (-0.14%)|
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In a late surge on Thursday, Jet Airways shares soared 9.7 per cent to close at Rs 408.5 on the Bombay Stock Exchange on speculation the airline’s promoters had initiated talks to sell stake in the company.
Market sources said the promoters were considering selling five per cent stake to investors or a foreign airline. This would reduce their holding in the company to less than 75 per cent.
According to Securities and Exchange Board of India rules, to ensure compliance with the minimum 25 per cent public shareholding criteria, promoters have to cut stake in companies to less than 75 per cent by June 2013.
Company officials declined to comment on the matter.
While a section of the market was abuzz with speculation Jet promoters would sell the stake to a West Asian airline, others said it was possible the stake sale would be carried out through a placement to institutional investors. Life Insurance Corporation and HDFC Mutual Fund are among the top institutional shareholders in Jet Airways.
Recently, the government had allowed foreign airlines to buy up to 49 per cent stake in domestic aviation companies.
Investment bankers, however, feel as of now, the chances of a foreign airline buying stake in Jet are remote.
“No foreign airline would be interested in buying stake of just five per cent. There is no strategic alliance in such a stake sale. Such placements would only interest institutional investors,” said the head of a leading domestic bank.