India Markets closed

Jet Airways may turn to Adani Group for investment

Manisha Singhal

Jet Airways promoter-chairman Naresh Goyal is understood to have approached the Adani Group with a proposal to invest in his ailing airline, which is in dire need of funds. As is known, Jet was earlier in talks with Tata Group but it seems the talks did not lead to any concrete result with the latter keen on investing only if Goyal relinquished his control over the carrier.

Adani Group Spokesperson said, We vehemently and outrightly deny any such talks ongoing between the Adani Group and the airline. Any such report is baseless & speculative.

The latest development comes after earlier this month the Abu Dhabi-based Etihad Airways put strict conditions for infusing funds into the cash-strapped airline. Etihad, which currently holds 24% stake in Jet, has offered an investment proposition in the carrier at Rs 150 per share, a huge discount to Jet’s current trading price, to raise its stake to 49% but wants exemption from an open offer.

Etihad also wanted that Goyal’s stake should come down to around 22% from the current 51% and he and his family should have no role in the running of the airline. The conditions were outlined in a letter by Etihad CEO Tony Douglas to the State Bank of India chairman Rajneesh Kumar. The SBI is the lead lender to Jet.

In response to Etihad’s offer, Goyal also wrote to the SBI chairman offering to invest up to Rs 700 crore in the airline as well as pledge all his shares on the condition that his stake does not fall below 25%. He also said that should it fall below 25%, he should be given a chance to raise it without having to go through the mandatory open offer.

On December 31, 2018, Jet had defaulted on a loan repayment to the consortium of banks. Sources in the know of development told FE that with lessors grounding Jet’s plane due to non-payment, Goyal has begun scouting for alternate sources of funds. On Tuesday, the lessors grounded at least four of Jet s aircraft forcing the airline to cancel flights.

Adanis have earlier explored investing in the aviation space and were looking at budget carrier SpiceJet when former promoters Marans were looking for a buyer almost five years ago. Jet Airways declined comment over the development. In response to FE’s query, Etihad said that it does not comment on rumours and speculation.

Jet, in a corporate announcement on Monday, informed the stock exchanges of an EGM to be held on February 21 to approve increase in its authorised share capital from Rs 200 crore to Rs 2,200 crore.