Naresh Goyal-promoted Jet Airways and Abu Dhabi-based carrier Etihad Airways are likely to finalise a deal that will see the Gulf carrier picking up 24% stake in the first-ever foreign direct investment in the Indian aviation industry by the first week of February, two people in the know of the development confirmed on Tuesday.
?Final negotiations are going regarding the valuations,? said one of the persons. ?Things should be wrapped up by the first week of February. At the moment Jet and Etihad?s internal teams are working out the final modalities and valuations.?
Earlier in January, senior government officials said that the deal is expected to take place at R1,500 crore to R1,800 crore. Since then, Jet?s shares have moved up 2.5% to and closed at R594.15 on Tuesday. As per Tuesday?s share price, Jet?s market valuation stands at R5,129 crore.
Jet Airways is also expected to reveal the regulatory process that it will follow when the announcement of the deal is made. The company would need to change the shareholding structure and promoter group company Tail Winds will need to transfer its shareholding to Goyal?s name in order to adhere to foreign investment limits in the aviation sector.
?The process for applying for regulatory approvals will begin after the public announcement of the deal which is likely to be in the first week of February,? one of the persons in the know of the development said.
?Various structures are being explored by the legal and commercial teams and care is being take to ensure that all regulatory requirements are fully complied with,? Jet said in a filing to the Bombay Stock Exchange on January 3.
?By its very nature, there cannot, at this stage, be a firm time line as to the progress of these negotiations considering the complexity of transnational transactions such as this and the complexity of the legal requirements of the regulatory structure,? the filing added.
The teams of the two airlines are also looking at opportunities to expand in the US and Europe once the stake sale is completed.
?The plan is to fully utilise the capabilties of both the airlines and expand in the lucrative markets of US and Europe,? the person quoted above said. ?However, before the deal is firmed up it will be premature to discuss the nature of these joint expansion plans.?
Jet Airways is also likely to deploy additional capacity to Abu Dhabi which will ease the pressure somewhat on Etihad to bring Indian traffic to its hub.
