Abu Dhabi carrier Etihad’s Rs. 2,058-crore stake purchase in Jet Airways seems to have hit an air pocket, with regulators seeking more clarity on the deal to ensure overall competition in the aviation market is not affected and interests of public shareholders and consumers are protected.
Separate clarifications have been sought on the deal, which involves a 24% stake buy in Jet by Etihad and is the first investment by a foreign carrier in an Indian airline, by the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI).
While queries raised by the two regulators are different, both of them are concerned about certain contours of the transaction that indicate a larger control of Etihad in Naresh Goyal-led Indian carrier despite the purchase of only 24% stake, sources said.
The two regulators are seeking further clarity on the transaction and might suggest certain changes, or at least an additional disclaimer by the two parties, to ensure that Etihad’s ownership powers in Jet remains in line with its 24% stake in the company’s equity capital, they added.
Queries sent to Jet Airways remained unanswered.
SEBI is also looking into a sharp surge in the share price of the company in the run-up to the deal. Expectations of an open offer was said to be the main reason behind the rally.
According to rules, any share sale of 25% or a higher stake in a listed company requires a mandatory open offer by the acquirer for purchase of further 26% stake from public shareholders.