Suitors for Jet Airways hunt for partners; Naresh Goyal may join race

Naresh Goyal, who still holds a 25 per cent stake in Jet, is considering looking for a partner as he is allowed to bid for the airline
Leading sovereign and government-backed funds such as the Abu Dhabi Investment Authority (ADIA) and Singapore-based Temasek Holdings as well as private equity funds like Blackstone and TPG have been sounded out by potential strategic investors on whether they are open to a joint bid for debt-ridden Jet Airways.

While the auction process is in a preliminary stage, sources in the know say Naresh Goyal, who still holds 25 per cent in Jet, is considering looking for a partner as he is allowed to bid. The ADIA as well as Etihad Aviation Group, which controls Etihad Airways, is  government-owned and a possibility of an alliance cannot be ruled out, the sources added. Etihad has a 12 per cent stake in Jet, after the lenders took over the company.

A final call by PE investors and sovereign funds, they said, would be taken on the basis of the bid documents and the possibility of the business providing reasonable returns on their investments.

Asked whether it would support Etihad in case it wants to bid for Jet, a spokesperson for the ADIA said: “I am afraid we are not able to comment on speculation about possible investments.”


 Temasek said that as a policy, it does not comment on speculation, while both Blackstone and TPG declined to comment.

A senior executive with a foreign carrier pointed out that it would be impossible for them to bid for Jet on their own as the current FDI policy allows airlines to hold only up to a 49 per cent stake, while the banks would be putting 51 per cent on the block. “There is no way that we can buy Jet on our own,” he said. 


He also said that considering that Etihad’s demand for an exemption to a mandatory open offer to the acquirer was not accepted by the Securities and Exchange Board of India, there is no reason to believe the rules will change. In such a scenario, one way out would be to rope in PE players or sovereign funds as overseas players other than foreign airlines are allowed to invest up to 100 per cent in the airlines business. However, foreign carriers have a cap of 49 per cent.


On Monday, the lenders took control of Jet Airways after ousting Goyal and his wife Anita from the board. However, while the banks have converted their debt of Rs 8,300 crore into equity by picking up a 51 per cent stake, Goyal’s stake remains at 25 per cent, and that of Etihad at 12 per cent. The banks, though, made it clear that both Goyal and Etihad could participate in the bidding process, which is expected to be completed by May-end. The banks have also signed a binding agreement with Goyal that once a new investor comes in, they would reduce their stake to below 10 per cent, which would effectively make them a non-promotor. In case they bid and win, the rule will not be applicable.  



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