New Delhi, Oct. 3: The cabinet committee on economic affairs (CCEA) has approved the sale of a 24 per cent stake in Jet Airways to Abu Dhabi-based Etihad Airways for a little over Rs 2,000 crore, marking the end of prolonged rounds of negotiations on the deal between government agencies and the two airlines.
This will be the biggest foreign direct investment in the country’s aviation sector.
“The CCEA today gave its approval to the proposal of Etihad Airways to subscribe to 2,72,63,372 equity shares of Rs 10 each of Jet Airways Ltd amounting to 24 per cent of the post issue paid-up equity share capital for an amount not exceeding Rs 2,057.66 crore. The Foreign Investment Promotion Board (FIPB) has recommended the proposal,” the civil aviation ministry said in a statement.
On Tuesday, the Securities and Exchange Board of India (Sebi) had cleared the deal in its revised form after an assurance that Jet would not give controlling powers to the foreign carrier.
The deal had got stuck in a regulatory maze for almost five months.
The cabinet gave its approval on the conditions that Jet and Etihad would adhere to the RBI guidelines and Sebi regulations besides complying with the Indian laws. They have to take prior FIPB permission for making any changes in the shareholder agreement, commercial co-operation agreement, articles of association, investment agreement and shareholding patterns, sources said.
According to civil aviation minister Ajit Singh, the deal is extremely good for the aviation sector.
“The CCEA has cleared the Jet-Etihad deal. The pact they had signed had many problems. It went through all the departments, including the FIPB twice, and that is the reason it took a bit longer. It is great for the industry and passengers,” he said.
Goyal will hold 51 per cent stake and Etihad 24 per cent, with 25 per cent remaining with the public.