The Foreign Investment Promotion Board (FIPB) is understood to have given its nod to foreign investment proposals of GMR Airports ($200 million or Rs 960 crore), and Jet Airways ($400 million or Rs 1,920 crore), among others last week. This will pave way for Jet Airways to not only fund its expansion but also help to reduce debt burden which is estimated to be around Rs 15,000 crore. The move will also help GMR Airport Holdings fund its expansion plans.
The FIPB nod to various foreign investment proposals last week will cross Rs 3,000 crore, the highest to be cleared by the nodal agency dealing with the matters relating to foreign direct investment in India, in the current calender year, as reported by FE earlier. So far, the largest investments approved by FIPB on a single day was for Rs 2,727.41 crore in September.
GMR Airport Holdings Bangalore, the wholly owned subsidiary of GMR Infrastructure, will now be able to raise around Rs 960 crore from Mauritius-based private equity firm Macquarie SBI Infrastructure Investments by offloading 39.05% stake by way of compulsorily convertible preference shares. As a result of the foreign investment transactions, GMR Airports Holdings will be valued at about Rs 2,400 crore. Currently, the company?s paid up capital is pegged at about Rs 341 crore and owns around 9% stake in Delhi International Airport (DIAL) and the GMR Hyderabad International Airports (GHIAL).
According to sources, GMR Airports will use the funds to buy out the holdings of its parent GMR Infrastructure in airports business, including its equity stake in DIAL and GHIAL. The FIPB nod to GMR Airports came after it got the go-ahead from the department of revenue in the finance ministry which had earlier requested the deferment of the GMR proposal in order to examine the source of funds, sources said.
The FIPB is also said to have cleared the decks for foreign investment inflow in leading private carrier Jet Airways. Jet Airways will now be able to raise $400 million via qualified institutional placements. Sources said the promoters share may come down by around 20% as a result of it raising money via the QIP route.
Earlier, the proposal from Jet Airways had run into regulatory hurdles as its foreign shareholding exceeds the stipulated 49% cap. Sources said it got the FIPB nod after Jet Airways clarified its position on the reduction of foreign equity to reach the permissible limits.
Currently, Tail Winds (TWL), which is registered in the Isle of Man, owns 79.9% in Jet Airways. Sources said Jet Airways wrote to the FIPB seeking its nod and making a plea for treating its proposal as an ?exception? on the renewed commitment that it would bring down its foreign holding to 49% in next three years. According to sources, Jet Airways had again sent clarifications last month against the queries raised by FIPB with respect to its proposal.