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Jet Airways revival plan picks up pace; banks try to rope in new strategic investor

aviation | May 27, 2019 9:46 AM IST

Jet Airways revival plan picks up pace; banks try to rope in new strategic investor

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Hinduja Group is firming up an investment plan for Jet Airways and the group will bring in another investor in a joint venture partnership to pick up stake in the airline.

A crucial meeting with Etihad Airways and potential investor, Hinduja Group recently has sparked new hopes for the grounded Jet Airways. Hinduja Group is firming up an investment plan for Jet Airways and the group will bring in another investor in a joint venture partnership to pick up stake in the airline, sources familiar with the matter told CNBC-TV18.

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Lenders to Jet Airways are firming up the stake sale process, and is expected to complete the process by end of this month, the sources said, requesting anonymity.
CNBC-TV18 has learnt that banks will sell up to 70 percent stake in the airline to four investors including Etihad Airways. While Etihad Airways has proposed to hold 24 percent stake, National Investment and Infrastructure Fund (NIIF) is likely to buy 20 percent stake in the airline and bring in Rs 2,000 crore.
Hinduja Group, along with a new investor, is likely to bring in at least Rs 2,300 crores and jointly pick up 24-26 percent stake in the airline, as per the plans bring discussed currently, the sources added.
Further, lenders to Jet Airways are looking at buy 13 percent stake in the airline eventually, as part of the plan under discussion, pointed out a source.
The total capital requirement for the airline to run operations on a smaller scale, as per the plan, is about Rs 6,000 crore, clarified the sources. While Etihad Airways is expected to bring in Rs 1,700 crore, NIIF Rs 2,000 crore, the remaining capital requirement will have to be met by Hinduja Group and the new investor, they said.
“Etihad continues to work directly with key stakeholders in India to help find a solution which would ensure Jet’s return as a viable and competitive Indian airline, as it has been doing consistently for the past 15 months,” Etihad Airways spokesperson told CNBC-TV18.
Clarity is still awaited from the Reserve Bank of India (RBI) on the debt conversion formula for banks, and it is likely to come with the new circular on bad loans resolution which will replace the older February 12 circular, the sources said, adding that banks will convert debt to acquire a large stake in the airline before selling it to new investors.
As for the promoter of the airline, Naresh Goyal, sources aware of negotiations added that Goyal will not hold more than 3-6 percent stake after the debt conversion by lenders. Goyal continues to hold a 51 percent stake currently.
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