NIIF BOARD COLD ON JET RESOLUTION PLAN

The sovereign fund has not approved a plan or initiated due diligence

While lenders to Jet Airways are looking for a faster resolution to the crisis, the National Investment and Infrastructure Fund (NIIF) is yet to decide if it will invest in the distressed carrier. Sources said the board of the sovereign fund held two meetings over investment but did not approve any plan.

“The board meetings were inconclusive. There was opposition from at least three members, which stalled the (investment) approval process,” said a person aware of the development. The board of NIIF has six members, which includes finance secretary Subhash Chandra Garg, IAS officer Rajaraman Kalyanraman, and NIIF Chief Executive Officer Sujoy Bose. The rest of the members are private sector executives like Sanjay Bhandarkar, an investment banker, HDFC Chairman Deepak Parekh, and Tata Sons veteran Ishaat Hussain.

“The NIIF has a stringent policy to identify sectors and entities where it would like to invest. It then does a thorough due diligence. The process can take more than month. In Jet’s case, a due diligence process hasn’t been initiated yet,” the person familiar with the matter said. Bose did not respond to queries about the matter.

The NIIF’s indecision is critical because, according to the deal signed between Etihad and Jet promoter Naresh Goyal, a new investor was to infuse between ~1,600 crore and ~1,900 crore to hold about 20 per cent stake in the company. According to the agreement, the consortium of lenders, led by the State Bank of India, will convert its dues into shares and pump in an additional ~1,000 crore

to raise its stake to 29.5 per cent. Etihad was also expected to infuse ~1,600 crore to raise its shareholding to 24.9 per cent.

The NIIF was approached by the

lenders after the Abu-Dhabi carrier, which holds 24 per cent stake in the company, refused to increase its stake beyond 25 per cent without an exemption from open offer. The Securities and Exchange Board of India did not agree to the idea.

Goyal had earlier reached out to Lulu group owner Yusuff Ali M A for infusing cash into the carrier, but the plan didn’t materialise.

The NIIF is backed by India and was established to provide long-term capital to the country’s infrastructure sector. Budget 2015 set the ball rolling for its creation and NIIF was set up as an alternative investment fund in December 2016, with a planned corpus of ~40,000 crore. The Indian government has a 49 per cent stake in NIIF with the rest held by marquee foreign and domestic investors such as Abu Dhabi Investment Authority, Temasek and HDFC Group.

An early resolution to the financial woes is crucial for Jet. More than 50 planes have been grounded by lessors due to non-payment of lease rentals, while it has defaulted on interest payment to domestic and foreign lenders and delayed salaries to pilots.