Jet surges 17% on hopes of FIPB clearing Etihad deal

Shares of Jet Airways today shot up over 17 percent on the hope that FIPB will approve its proposed stake sale to Etihad Airways next week amid reports that the Abu Dhabi-based carrier has agreed to changes giving 'effective control' to Indian promoters.

Also read: Etihad agrees to cut number of directors on Jet board
    
After surging 19.35 percent to Rs 402 in intra-day session, the stock finally ended the day 17.43 percent higher at Rs 395.50 on the BSE. At the NSE, the scrip closed with a gain of 17.82 percent at Rs 397.70.
    
Led by the rally in the stock, the market value of the company soared by Rs 507 crore to Rs 3,414 crore.      In terms of volume, 23.81 lakh shares of the company changed hands on the BSE, while over 77 lakh shares were traded on the NSE.
    
"The FIPB, which clears foreign direct investment proposals, is scheduled to consider the Jet-Etihad deal at its meeting on Monday. The street expectation is that it will be cleared. The stock soared 18 percent," said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.
    
Etihad Airlines has agreed to halve the number of directors on the Jet Airways Board to two posts under the Rs 2,058 crore deal, giving the Indian promoters 'effective
control' of the carrier.      This, alongwith other details of an amended shareholding agreement (SHA), has been forwarded to Finance Ministry ahead of the FIPB meeting on July 29 to consider the proposal. As per the revised shareholding agreement, Etihad would have two directors on the board after the deal, as against the earlier proposal of four directors in the 10-member board, sources said. This seeks to address the concerns of Foreign Investment Promotion Board (FIPB) and market regulator Sebi with regard to effective control after the foreign direct investment, which is the largest FDI in the aviation space so far.
    
The FIPB is meeting on July 29 to consider the proposal. Last month it deferred a decision on Jet's proposal to sell 24 percent stake to Etihad. The deal is the biggest foreign investment in the Indian aviation sector so far.