i Develop Stocks Advisory

Jet Airways intends to tap overseas investors As the markets still look grim for a rights issue, Jet Airways, plans to tap other avenues for raising funds. The listed airline company said its board has decided to seek shareholders approval for raising funds from overseas investors, through issue of ADRs/GDRs or FCCB or through Qualified Institutional Placements. In a notice to the stock exchanges, Jet Airways said it would seek the approval through a postal ballot. The private Indian carrier has been delaying its $400 million rights issue since October last year on account of unfavourable stock market conditions. In July last year, the company said the issue would hit the market in October, then it got shifted to January and then to March of 2008. However, last week while announcing the airline’s expansion plans for international destinations, Naresh Goyal, Chairman, said that the company is open to all sources of funding and rights issue will follow once the “markets settle.” Jet Airways officials were unavailable for comment on the board’s decision to go for alternative plans to raise funds. According to market analysts, while the rights issue might still be on its way, a QIP is a much quicker and easier method of raising money. “Since the markets are not looking up, there are chances a rights issue will not be fully subscribed. Also, the issue would have various regulatory clearances attached, making the process more time consuming. At the same time, if some one offers a good price, the deal would be done in one go,” said Siddhartha Khemka, analyst with ICICI Direct. Jet has been planning the rights issue to fund the induction of aircraft and the acquisition of Air Sahara which it concluded last year. “They need money now. As their debt:equity ratio is 5:1, the company needs to dilute equity to further fund its expansion plans,” said another analyst from a Mumbai-based broking firm.