Dhabi-based airline will also not have the right to appoint independent members on the nomination and audit committees of Jet’s board and Etihad’s members can only be appointed to the two committees if they are nominated by the board.
“Sebi has already cleared the deal, the civil aviation ministry’s concerns have been resolved and even the corporate affairs ministry was looking into the deal. We have followed all proper procedures,” civil aviation minister Ajit Singh said after the deal was cleared by the FIPB.
“The deal is good for the passengers and the civil aviation sector. We require a lot of foreign investment on our infrastructure side. The deal will also reaffirm investor confidence in the India growth story,” he said.
Monday’s conditional approval came after Jet-Etihad submitted a revised proposal to the government which assured that the control of the company would remain in Indian hands as envisaged in the policy on aviation FDI.
On April 24, Jet Airways and Etihad had agreed on a deal as per which the Abu Dhabi-based airline was to invest Rs 2,058 crore to pick up 24% stake in the Goyal-promoted airline. The deal was to be done via a preferential issue of shares to Etihad at Rs 754.53 per share. As part of the deal, Tail Winds, the former holding company of Jet Airways, would sell stake to Naresh Goyal. Naresh Goyal held 100% stake in Tail Winds, which was registered in Isle of Man.
The deal ran into hurdles with market regulator Securities and Exchange Board of India seeking changes to the shareholders’ agreement in May to ensure ‘effective control’ of Jet doesn’t slip into Etihad’s hands. The deal was subsequently reworked; still the FIPB deferred giving clearance to the proposal at its meeting on June 14.
Jet and Etihad yet again reworked the shareholders’ agreement and submitted the same to the FIPB on July 26. “Sebi has told the finance ministry that Jet and Etihad have addressed the market regulator’s concerns on effective control; so that matter has been resolved,” said the finance ministry official quoted above. “There are also no issues regarding the NRI ownership in the airline in the form of Naresh Goyal. Revenue department officials were also present at the meeting on Monday.”
Jet’s shares, which had rallied 25% over the last two trading sessions on the BSE, closed 4.22% higher on Monday at Rs 412.20.