Mumbai: Naresh Goyal, who is the promoter and chairman of India’s largest airline group Jet Airways, will sell at least 5% of the stake he owns to private equity houses by March 2008 in line with a market regulator fiat on public shareholding of listed companies in India.
Goyal, whose company Tail Winds Ltd currently controls 80% equity in group flagship Jet Airways (India) Ltd, is selling the shares in keeping with the guidelines issued by the Securities and Exchange Board of India (Sebi) in April last year, which said that all listed companies, with certain exceptions, have to ensure a minimum level of public shareholding of at least 25%, up from the currently mandated 10%, of the total number of issued shares. The deadline for this change is 1 April 2008.
Jet Airways chairman and promoter Naresh Goyal
Confirming the development, Goyal said he would act upon the guidelines of the market regulator.
“I will certainly fall in line with the regulator’s guidelines. I will do whatever is good for my company and its balance sheet,” he said on the sidelines of the company’s annual general meeting on Thursday.
Last Jet Airways sold shares was when Goyal offloaded 20% of the airline firm’s equity capital in an initial public offering in February 2005 at Rs1,100 a share. Since then, the share price has plummeted to as low as Rs475 last July, before recovering to the current levels. The firm’s shares fell 4.95% on the Bombay Stock Exchange to Rs907.35 on Friday.
“With the Indian aviation scenario improving, Goyal is aiming at fetching better valuation, if not a premium,” said a person familiar with the plan, who requested anonymity. This person added that the Singapore buyout fund Temasek Holdings is one of the investment houses in talks with the Jet Airways’ promoter. This could not be independently verified by Mint. A senior Jet executive, who, too, did not want to be named, said the company is finalizing the modalities of a shares placement.
Jet Airways also plans to raise $400 million through a rights issue sometime in December or January to fund its aircraft acquisition programme, chairman Naresh Goyal says
Jet Airways is also planning to raise $400 million (Rs1,592 crore) through a rights issue to fund its aircraft acquisition programme.
“We have selected the bankers to the (rights) issue and their lawyers are in the process of preparing the relevant documentation. We expect to launch the rights issue sometime in December 2007 or January 2008,” Goyal said. SSKI Corporate Finance Pvt. Ltd and HSBC Securities Services & Capital Markets India Pvt. Ltd are managing the issue.
A Mumbai-based industry analyst said that the stabilization of air fares following the consolidation in the industry augured well for Goyal. “But a preference issue would have been best option for (him) to bring down his shareholding to 75% rather than going for a rights issue of $400 million,” the analyst said.