Jet draws a blank on Day 1 of bidding

Forum Gandhi Mumbai | Updated on April 08, 2019 Published on April 08, 2019

According to the bid document released by SBI, the acquirer would get 75 per cent of stake in Jet Airways   -  REUTERS

Suitors keep things under wraps; Etihad may emerge top contender

Lenders to Jet Airways have not received any formal expression of interest from any investor at close of first day of bidding process. However, according to sources close to the sale process, Etihad Airways, along with National Investment and Infrastructure Fund (NIIF), could emerge the top contender for acquiring majority stake in the debt-ridden airline.

Private equity players, including KKR, TPG Capital, and international airlineLufthansa have reached out to people involved in the sale process seeking clarity on the bid document released by lenders on Monday.

A top source close to the lenders said that Abu Dhabi-based Etihad Airways would be “interested” in bidding for a stake in Jet Airways, but “no expression of interest (EoI) has been received from any potential investor so far.”

Last date is April 10

The bidding process was opened on Monday and the last day for the submitting the bids is April 10. According to the bid document released by State Bank of India, the lead lender to Jet Airways, the acquirer would get 75 per cent of stake in the stressed airline.

Market experts said Tata Sons, Delta Air, TPG, SpiceJet, along with the current stake holders Etihad and Naresh Goyal, the founder of Jet Airways, could be potential bidders. “The last date to bid is April 10, we will wait till then. Usually, the bids come in only in the last day as players like to keep things under wraps for as long as they can,” said a consultant advising one of the potential bidders.

SBI would sell the airline to either a strategic investor from the airline industry or a financial investor. A strategic investor should have a net worth of at least ₹1,000 crore and at least three years of experience in the industry. A financial investor should be with at least ₹2,000 crore of networth. In case the bidder is a consortium, it shall consist of not more than three members with shareholding of an individual member not being less than 15 per cent, said the bid document . However, government- promoted funds/quasi-sovereign wealth funds do not have to meet the qualification criteria. This could pave the way for National Investment and Infrastructure Fund (NIIF) to place a bid along with a strategic investor.

Further, such funds shall not be required to respond to EoI and would be eligible to directly procure the bid document free of cost and submit their bids on the last day announced for submission of bids. NIIF is a sovereign wealth fund that was set up by the Government of India, with maximum funding from Abu Dhabi Investment Authority.

According to analysts, the rules are loaded in favour of a player who already knows the company, thereby indicating that Etihad could emerge the top bidder. Etihad Airways owns 24 per cent stake in Jet Airways. “Etihad may be bidding along with NIIF. The banks are also very much in favour of Etihad investing in the company,” said a company source. In response to BusinessLine’s query a spokesperson at Etihad said that the company do not comment on speculation.

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Published on April 08, 2019
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