Jet Airways chairman Naresh Goyal has transferred around 29 per cent stake in the country’s second-largest carrier from another overseas promoter entity owned by him through a stock market transaction worth Rs 1,434 crore ($257 million).
The shares were transferred from offshore entity Tail Winds Ltd to Goyal’s own name at Rs 570 a piece. Jet Airways scrip rose 0.78 per cent to close at Rs 584.25 a share, on the BSE in a weak Mumbai market on Thursday.
With this, Goyal’s personal holding in the company has touched over 29 per cent. As of March 31, 2013, he held 79.9 per cent stake in the airlines through Tail Winds out of the 80 per cent total promoter holding.
The holding through an overseas entity is said to be a stumbling block to get regulatory clearances for the deal with Etihad. Etihad had announced a deal to acquire 24 per cent stake in Jet Airways through a preferential allotment in the first such inbound acquisition by a foreign carrier after India opened its skies to foreign investors. Etihad is to buy the shares of Jet Airways at Rs 754.74 a piece.
Regulatory clearances for the deal hinges on interpretation of the authorities of the holding as FDI of only up to 49 per cent is allowed in the aviation business.
Post the equity dilution (with preferential allotment to Etihad), Goyal will hold 60.8 per cent stake in the company. This may not be enough to enable him to meet the public listing norms, which put a ceiling of 75 per cent on the maximum stake to be held by promoters if the authorities feel Etihad has a large say in the board of the company and club it as a co-promoter. The minimum public holdings norms are to be met by June 30, 2013.
Goyal is also to sell part of his stake to bring his stake down further to around 50 per cent (and total promoter holding to 75 per cent if Etihad’s 24 per cent stake is clubbed together). After the latest stake transfer, the total foreign stakeholding after preferential allotment to Etihad would come to around 62 per cent, as per VCCircle estimates. This means the next round of stake sale by Goyal could be through Tail Wind instead of sale of shares held directly by him.
This would bring down the total foreign holding in Jet Airways to meet the FDI norms while also meeting the minimum public holding norms for a listed company.