Jet Airways QIP issue put back again…

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By admin October 10, 2010 09:42

Jet Airways QIP issue put back again…

The fund-raising plans of Jet Airways, has been pushed back again as the Indian government on Thursday last week sought more clarification on the airline’s qualified institutional placement (QIP) issue.

Jet had submitted a proposal to the Indian Foreign Investment Promotion Board (FIPB) to raise $400 million through a QIP to de-leverage its balance sheet. The airline already has an in-principal approval from the Indian government for raising funds from overseas so in this instance it is likely that the hold up to FIPB approval could be the sector limit for foreign direct investment (FDI) in the aviation sector, which is currently caped at 49%. The Indian government could temporarily relax the (FDI) cap for Jet Airways in this instance on the basis that Jet brings its foreign investment back within the 49% limit within a specified timeframe.

As of June 30, Jet’s total debt in local and foreign currency taken together was around Rs13,500 crore.

The Reserve Bank of India recently allowed banks to restructure airline debts. Airlines accumulated huge debt between 2006 and 2008, when the demand for air travel had dipped and stiff competition forced carriers to sell way below cost.

Kingfisher is looking to raise $250 million through a global depository receipts issue. Its team is currently spread around the institutional and private wealth investment hubs looking for investors in the US, the UK and Hong Kong. Kingfisher needs a little help from its government so watch what happens on Jet to see if it is likely to get it first.

admin
By admin October 10, 2010 09:42
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