The Hinduja Group has obtained the approvals of key stakeholders of Jet Airways to invest in the debt-ridden airways. However, there is no confirmation on the deal yet. The debt-laden airways have a total debt of Rs. 12000 crores. Therefore, to become an investor, the Hinduja Group has to go through a lot of due diligence. The deal is an optimistic turn in the story as the key stakeholders of Jet Airways, Mr Naresh Goyal and Etihad Airways have given a green flag to the Hinduja Group. After the resignation of the majority of the board members and executive officials of Jet Airways, approval from the remaining stakeholders is a must.
Mr Naresh Goyal is the founder of Jet Airways and holds 51% stake but has pledged 41% of it to the lenders. Etihad Airways, on the other hand, is a minority shareholder in Jet Airways. Their approvals will have a major impact on any investment decision.
The Hinduja kinsmen, Mr GP Hinduja and Mr Srichand Hinduja have recently retrieved their rank. They claimed the throne to be the wealthiest in Britain. Shortly after which they were approached to buy a stake in Jet Airways by Etihad representatives. There have been informal talks going about, but no such formal meetings have been carried out as yet.
The Hindujas have endeavoured to expand into aviation space in the past years. In 2001 when the public airline Air India opted for privatization Hindujas were amongst the bidders. The organization also had a tie-up with Lufthansa AirCargo from 1997 till 2000. Mr Naresh Goyal and the Hindujas have maintained a cordial relation for almost 2 decades. Their friendship might act as a catalyst for the deal.
Grounded Jet Airways:
Jet Airways had stopped its operations on April 17, 2019, after a major financial turmoil in the airline. The banks refused for an emergency infusion of cash of about Rs 400 crore requested by the airways. In March 2019, the lenders of the airlines had taken control of the company’s board. This was after Jet Airway’s founder Naresh Goyal and his wife exodus the company. The SBI-led consortium has 26 lenders. They initiated a bidding process to sell stake in Jet Airways to recover its dues.
From the four entities who had shown interest in the bidding process of Jet Airways, Etihad was the only one to materialize. But this came with a constraint as well. Etihad agreed to invest in Jet airways however did not agree on being the sole investor. The Gulf-carrier currently holds 24% stake in Jet Airways and infused Rs. 1,700 crores in the airline.
The Hindujas have fixed a formal meeting with Etihad on 23rd May 2019 where discussions of a possible joint venture will be made. Top executives of SBI, leader of the lender’s consortium is also expected to be present in this meeting. This meeting is going to be held in the headquarter of Etihad in Abu Dhabi, UAE.
