Jet-Etihad deal put on hold by Foreign Investment Promotion Board

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New Delhi: The Rs 2058 crore deal struck by Jet Airways to sell 24 per cent of its stake to Abu Dhabi's Etihad Airways was put on hold on Friday by Government's foreign investment approving agency which sought more clarity on control and ownership of the Indian airline.
"It (Jet-Etihad proposal) has been deferred. We need more details on effective control and ownership," Economic Affairs Secretary Arvind Mayaram, who heads the Foreign Investment Promotion Board (FIPB)," told reporters after a meeting here.
Market regulator SEBI and competition watchdog CCI have already sought clarifications from the premier private carrier on the transaction, to ensure that Etihad's ownership powers in Jet remains in line with its 24 per cent stake in the company's equity capital.
Asked about the development, Civil Aviation Minister Ajit Singh said SEBI has raised some concerns and asked both the airlines to "rectify some parts of the pact." "I don't see any major problem for the deal," Singh said.
When contacted, Jet sources said they have already submitted the necessary clarifications to SEBI. It could not be ascertained when the FIPB would take up the Jet-Etihad proposal next. Once the FIPB clears it, the matter would be sent to the Cabinet Committee on Economic Affairs for approval. All deals over Rs 1,200 crore have to be approved by CCEA.
Shares of Jet Airways closed at Rs 469.20, up 8.47 per cent on the BSE, ahead of the FIPB meet. The deal is the largest foreign investment proposal in the aviation sector after the government allowed foreign carriers to pick up stake in Indian airlines last September.
In March, the FIPB had cleared Rs 81 crore investment proposal of AirAsia to set up a JV airline company, AirAsia India, with Tata Sons and another partner. 
The proposal taken up by the FIPB and deferred today was to permit the preferential allotment of 27,263,372 equity shares of Jet, with the face value of Rs ten each, to Etihad. On the issues on which SEBI had sought clarifications from Jet, the airline sources said they had 'reworked' the share purchase agreement and the Articles of Association of the company to ensure that effective control of the company was not transferred to Etihad. They also said Jet Chairman Naresh Goyal was an Indian citizen residing outside India, while its Board would be dominated by the Indian owners who would have complete control over the airline management.
Under the Jet-Etihad deal, after the transactions are cleared by the regulatory authorities, Goyal will directly own 51 per cent in the airline while Etihad will own 24 per cent. The FDI policy for civil aviation, which was revised in September last year, allows foreign airlines and foreign institutional investors to invest up to 49 per cent in an Indian airline.
NRIs are already allowed 100 per cent investment. Ahead of the FIPB meet, Jet Airways on Thursday named Australian aviation veteran Gary Kenneth Toomey as its new CEO in place of Nikos Kardassis, who had resigned on May 31.