The author has posted comments on this articleTNN | Dec 15, 2012, 04.53AM IST
NEW DELHI: Nearly bankrupt Kingfisher Airlines is preparing the ground for getting FDI by capping FII investment at 3%. The decision was taken at the grounded airline’s board meeting on Wednesday as it talks to various foreign investors and airlines for a possible stake sale.
In a filing to BSE on Thursday, the airline said it has barred qualified foreign investors or other non-strategic foreign investment (excluding investment by NRI) with immediate effect “beyond its current level of 3% or such other percentage that may be decided from time to time under intimation to the stock exchanges”.
This is being done with a “view to keeping the company’s capital structure in readiness for transactions that may be identified in the future for benefit of all stakeholders”.
At the end of the September quarter, the stake of overseas investors in the airline was 2.5%. Foreign direct investment in Indian carriers is capped at 49% and recently the government allowed foreign airlines to pick stake up to that level too.
The airline’s scrip gained almost 5% on BSE on Wednesday. The airline’s shares prices have been constantly rising for past eight days, a rally that gathered pace after it admitted being in talks with Etihad.
Incidentally, Jet Airways is also in talks with Etihad but a high price being sought by the airline is said to have tilted the balance in Kingfisher’s favour.
The filing said: “In this connection, it has been advised that a fresh infusion of capital by a financial or strategic, Indian or non-resident investor is a possible alternative.” On Tuesday, the airline had said it was in “discussions with various investors, including Etihad Airways, for equity investments.” While there were reports that Kingfisher was trying for a 48% stake sale to the Gulf carrier, the airline said: “No agreement has been reached either with Etihad or any other airline and the matters are merely at negotiation stages.”