Shares of Jet Airways on Tuesday surged 8 per cent in early trade after the Rs. 2,058 crore-deal with Abu Dhabi-based Etihad was approved by the Foreign Investment Promotion Board (FIPB). Etihad will hold 24 per cent stake in the domestic carrier, and FIPB’s approval was based on major riders to maintain effective Indian control over the airline.
Cheering the move that was announced after the market hours on Monday, shares of Jet Airways opened the day on a positive note and as the trade progressed, it further gained 7.95 per cent to Rs. 445 on the BSE.
At the NSE, the stock zoomed up by 8 per cent to Rs. 444.
However, later the scrip pared most of its gain on profit-booking and was trading flat with 0.02 per cent gain at Rs. 412.30 on the BSE.
Over the past two trading sessions, Jet shares have gained 22.38 per cent.
Under the conditions set by FIPB, Jet will have to seek prior government approval to make any changes in the Share Holders Agreement (SHA) with Etihad or any change in shareholding of the company.
The conditions also include that all shareholder disputes and disputes under SHA would have to be adjudicated under Indian law as opposed to English law as was proposed in the revised SHA submitted just before the FIPB meeting. Any other arbitration can happen under English law.
Etihad would now have two seats on the 12-member Jet Board instead of three previously proposed. The Indian partner, Naresh Goyal, besides appointing four board members, will have the right to nominate the Chairman, whereas Etihad will appoint a Vice Chairman.
The Board will have four Directors from Jet, two from Etihad and six independent directors.