Sebi wants Etihad to go for an open offer to buy stake in Jet Airways. But the Abu Dhabi government is concerned about the financial disclosures required for an open offer. One part of the legal community believed that it was not necessary for Etihad to make an open offer.
The Jet-Etihad deal may have hit a speed bump. CNBC-TV18 learns that market regulator Sebi wants Etihad to go for an open offer to buy stake in Jet Airways. But the Abu Dhabi government is concerned about the financial disclosures required for an open offer, reports CNBC-TV18's economic policy editor Siddharth Zarabi.
This has been a deal that is been mired in some controversy or the other. The market regulator now feels that an open offer needs to be made because there was a difference of opinion from the time that this deal was struck.
One part of the legal community believed that it was not necessary for Etihad to make an open offer, but the other part of the legal community believed that Etihad would need to make an open offer, because in a sense this was joint control, they were acting in concert.
There is a very strong possibility that Securities and Exchange Board of India (Sebi) will indeed formally announce a mandatory open offer being triggered for 26 percent of the outstanding capital of this company. Sebi has not formally commented about this matter.
The key thing is a shift from sole control of an individual promoter, that is Naresh Goyal, to joint control. The conclusion at this stage is based on some of the discussions and details that are out in public domain.
The view within the Sebi is that this indeed would require an open offer being triggered. We are not at all suggesting that because of an open offer being triggered the deal will not go through.
This is a regulatory procedure because of changes that are to be made to the articles of association, certain issues with the right of first refusal and some other matters which will be triggered.
Abu Dhabi and Etihad both have certain difficulties with regards to the financial disclosures that are required to be made under such a deal.
Eventually we will have to wait for the final Sebi view on this, but for now it seems that an open offer is indeed on its way. Ajit Singh, civil aviation minister says, "They have to get clearance now from Sebi and then they will go to Foreign Investment Promotion Board (FIPB). Since it is more that Rs 1,200 crore deal, it will go to the cabinet committee on investments (CCI). We are already talking to airlines, we are not waiting for them. They have already given their requirements and we had taken requirements from other airlines also before committee team went to Abu Dhabi. Now we will get their concrete plans for next three sessions."