After sailing through the government’s foreign investment approval body FIPB with some riders, the Rs. 2,058-crore deal between Jet Airways and Etihad will be knocking on the doors of capital markets regulator SEBI and fair trade watchdog CCI this week.
Having agreed to various conditions and changes in their original shareholder agreement for Abu Dhabi-based Etihad’s proposed purchase of 24 per cent stake in Naresh Goyal-led Jet, the two companies are hopeful that the deal would pass the muster with the two regulators.
Incidentally, concerns about a possible change in control of Jet Airways in favour of Etihad, with just a 24 per cent stake, were first raised by SEBI and CCI and these became the main reasons for the proposed deal getting stuck for weeks together.
The deal was cleared by the Foreign Investment and Promotion Board (FIPB) late last month only after the two parties agreed to suitably change their shareholder agreement to address the control-related and other concerns raised by the regulators.
As a result, the two companies are hopeful of winning over at least one regulator’s go-ahead this week itself for their deal, which happens to be the first FDI by a foreign airline into India.
SEBI and CCI have been informed about the changes agreed upon by Jet and Etihad in their original agreement and these amendments have taken into account the earlier clarifications sought by the two regulators, sources said.
Jet Airways now requires approval of its shareholders in India for an amended shareholder agreement and Article of Association, for which it needs to file these documents with the stock exchanges.
If the changes mentioned in these documents are in-line with the conditional approval given by the FIPB meeting and as per the changes agreed upon before SEBI and CCI, the deal is unlikely to face any further regulatory hurdles, a senior official said.
FIPB has referred the deal for Cabinet Committee on Economic Affairs (CCEA) clearance.
The deal has already missed its original deadline of July 31 and the two parties are now keen to complete it before the new deadline of August 31 and their rush is evident from their legal and regulatory advisors working over time on weekends as well, he added.
As per the new deal, the direct and indirect control of the airline would remain with Naresh Goyal, while Etihad would not get any excess power beyond its 24 per cent stake.
However, there are no changes in the proposed shareholding structure of Goyal holding the majority 51 per cent stake, Etihad having 24 per cent and the remaining 25 per cent with the public shareholders including institutional and retail investors.