NEW DELHI: India’s foreign investment regulator gave conditional approval yesterday for a $379m deal by Abu Dhabi’s Etihad Airways to buy a stake in Jet Airways (India) Ltd, paving the way for more deals in the country’s domestic aviation sector.
Etihad had agreed in April to buy a 24 percent stake in Jet in the first such deal since the Indian government allowed foreign airlines to own up to 49 percent of Indian carriers last September.
But the deal had been delayed by regulatory scrutiny as well as concerns raised by some politicians relating to a bilateral accord between India and the United Arab Emirates.
The deal still has to be cleared by the capital markets regulator and obtain the approval of a ministerial investment panel before the airlines can close it.
“We have approved with some conditions,” India’s Economic Affairs Secretary Arvind Mayaram told reporters after a meeting of the Foreign Investment Promotion Board (FIPB). He did not elaborate on the conditions set.
Last month, the FIPB had deferred a decision on the deal seeking more details on who would be effectively in control of Jet. There were concerns that Etihad would control Jet even though it was taking a minority stake, officials have said.
The deal won regulatory approval after a revised shareholder agreement decreased Etihad’s presence on the board of Jet.
Etihad will now take two seats on the board, which will have up to 12 members, one less than initially planned. Jet’s founder group will appoint four board members and will have the right to nominate the chairman, whereas Etihad will appoint a vice chairman, according to the document.
REUTERS
