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Kingfisher creates room for ally entry

Mumbai, Dec. 13: Kingfisher Airlines has capped investments by foreign institutional investors (FIIs) at 3 per cent to facilitate FDI of up to 46 per cent in the carrier.

At present, domestic airlines can bring in foreign investments, both FDI and FII, of up to 49 per cent.

By capping the FII limit at 3 per cent, Kingfisher is making way for prospective overseas investor to pick up a maximum of 46 per cent in the airline. The overseas investor’s money will be FDI.

Kingfisher has been in talks with investors, including Etihad Airways, for equity funding.

The Vijay Mallya-led carrier today told the stock exchanges that it had imposed an FII cap, with a “view to keeping the company’s capital structure in readiness for transactions that may be identified in the future for benefit of all stakeholders”.

Kingfisher said no FII, qualified foreign investor or other non-strategic foreign investment (excluding investment by the NRIs) would be permitted beyond the current level of 3 per cent with immediate effect.

A resolution on the cap was passed at its board meeting on December 12.

At the end of the September quarter, overseas investors held 2.46 per cent in the airline.

Investors, who have been lapping up shares of the airline in the past couple of days, made a dash for the counter on the news. The scrip rose 5 per cent to touch an upper circuit limit of Rs 17.27 on the BSE today.

The Kingfisher board has been weighing various options to improve the company’s financial position.

“In this connection, it has been advised that a fresh infusion of capital by a financial or strategic, Indian or non-resident investor is a possible alternative,” it said.

Regarding the FII limit, Kingfisher said appropriate steps were being taken to inform the RBI and to seek consequent measures and approvals necessary to implement the decision.

The airline has over Rs 10,000 crore in accumulated losses, apart from the Rs 7,000 crore it owes to 17 banks.

Global forecast

India, China and Latin America will continue to lead the growth next year in the global aviation industry, which will improve its profit from $6.7 billion to an estimated $8.4 billion, the International Air Transport Association (IATA) said today.

 
 
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