FII Investment Via Open Market Not Part Of FDI In Domestic Airlines; SpiceJet Raises $15.4 Mn From BNP Paribas

FII Investment Via Open Market Not Part Of FDI In Domestic Airlines; SpiceJet Raises $15.4 Mn From BNP Paribas
by Sahad on Tue 20 Feb 2007 09:23 IST | Permanent Link | Cosmos
This will result in higher foreign institutional investment in Indian domestic airline companies. Reserve Bank of India has clarified that FIIs can pick up stake in airlines beyond the sectoral FDI cap of 49 per cent through secondary market purchases. RBI's view is that the sectoral cap of 49 per cent is not stipulated as a composite limit.
However, RBI is of the opinion that investment through GDRs should be within the overall FDI limit. Secondary market purchases by NRIs and erstwhile overseas corporate bodies (OCBs) will also be within the 49 per cent FDI limit.
In any case, FIIs can now buy shares of listed companies like Jet Airways, SpiceJet and Air Deccan from the secondary market immaterial of the FDI limit. RBI's clarification was in response to a query from SpiceJet, which has recently made a preferential placement to BNP Paribas to rasie Rs 68 crore ($15.4 million).
SpiceJet Raises $15.4 Million From BNP Paribas
In conjunction with RBI clarification, low-cost carrier Spicejet has announced the allotment of 13 million equity shares to BNP Paribas Arbitrage Fund out of the proposed preferential issue of 72 million equity shares for over Rs 68 crore ($15.4 million). BNP Paribas Arbitrage Fund's 13 million shares account for 5.43 per cent stake in the airline. The shares were issued at a price of Rs 52.69 per equity share.
In December, SpiceJet had planned to sell $80 million worth of shares on a preferential basis, while the company received offers amounting to $118 million. Tata Group, Ishtitmar, Telemnix, Goldman Sachs and UK's KBC Fund had invested, while private equity fund Texas Pacific group withdrew the offer.