Setback for Jet Air’s foreign QIP as FIPB refuses nod

Jet Airways' plans to raise $400 million through a qualified institutional placement (QIP) issue to foreign institutions got pushed back further on Thursday, as the government deferred a decision on the proposal of the private air carrier, seeking more clarifications.

"The airline needs to bring its foreign holdings down in some way as it crosses the foreign direct investment (FDI) cap of 49 per cent and then come back to us," an official said. The Foreign Investment Promotion Board (FIPB), at a meeting on 1 October, decided to defer the proposal after the civil aviation ministry said the airline was breaching the FDI guideline, reports said.

The ministry has already asked the airline to comply with the FDI norms and bring down its foreign holding to below 49 per cent. The airline has not so far responded to queries.

In August, after the annual general meeting of the airline, Jet chairman Naresh Goyal had said that the carrier has sought government's permission to dilute up to a 20 per cent of its stake, and had already applied to the FIPB. Goyal, however, had declined to specify any timeframe for the issue.

Jet had submitted a proposal to the FIPB for raising $400 million through QIP to deleverage its balance sheet and implement expansion plans.

Kapil Kaul, chief executive officer, India and the Middle East of airline consultancy Centre for Asia Pacific Aviation, said since the airline already has an in-principle approval from the government for raising funds from overseas the markets, it should eventually get through.