Etihad takes 24% stake in Jet
This strategic investment of $600 million commitment from Etihad will strengthen Jet Airways financial...
This strategic investment of $600 million commitment from Etihad will strengthen Jet Airways financial position
Mumbai (Agencies): At last, India gets its first major investment into Aviation sector after announcing Aviation policy, after the Abu Dhabi based airline, Etihad agrees to take 24 per cent stake in the Jet Airways for a consideration of $379 million.
Within few hours after Jet Airway's board had approved the allotment of shares, on Wednesday, Etihad had sent an e-mail accepting the offer and confirmed it would subscribe to 2.73 crore shares at price of `754.73 per share.
Besides, Etihad will also make a $150 million equity investment in Jet's frequent flyer programme and spend $70 million to buy Jet's three pairs of Heathrow slots through the sale and leaseback agreement announced in February. Etihad Further expressed its intention to continue discussion with Jet Airways to increase the investment.
However, Jet Airways continues its majority ownership with the Indian national and Jet's founder and non-executive chairman Naresh Goyal who holds 51 per cent stake in the airline. The deal makes Goyal compliant with the Sebi regulation of bringing down promoters' stake to below 75 per cent.
Responding to the development, Etihad Airways president and chief executive officer, James Hogan said: "We look forward to collaborating with Jet Airways and constructively working together with them and their stakeholders to build a sustainable, competitive and profitable airline."
The decision is subject to shareholders and other regulatory approvals, the company stated. As part of the deal, Jet will establish a hub in Abu Dhabi and expand its reach through Etihad Airways' global network.A After the stake sale, Jet Airways with become the first Indian airline to attract foreign direct investment as per the new aviation policy been introduced in September allowing foreign airline to invest up to 49 per cent.
The two airlines were on negotiating table since last year, however, the deal got delayed due to issues like investment protection and management control. Etihad Airways had already invested in Air Berlin, Air Seychelles and Aer Lingus (Ireland's national carrier).
According to sectoral experts, the deal will bring in fresh funding opportunity for Jet Airways, which has an estimated debt of around `12,000 crore, whereas passengers will get better connectivity options through the Jet-Etihad network.