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Joint bid for Jet Airways innovative but complicated: Experts
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SME Times News Bureau | 23 May, 2019
With conventional solutions remaining elusive for the grounded Jet
Airways, industry experts see a joint bid for the airline by strategic
and financial investors as a viable option wherein risks can also be
hedged.
"There are cases where management buy-outs are happening.
The employees are coming together to bid for the revival of the
company. There is no harm in being innovative. Like-minded people can
come together and bid," said a Mumbai-based investment banker.
He
cited the case of insolvent power transmission firm Jyoti Structures in
which a couple of dozens of investors came together to buy the company.
Jet
Airways remains grounded for over a month now and the attempt made by
its lenders led by the State Bank of India (SBI) to bring an investor on
board has failed.
"The idea (of two or three like-minded
investors coming together) is good. Now that the Hinduja Group has shown
interest in the airline, there seems to be light at the end of the
tunnel. It will also pave way for the business conglomerate to enter
into the aviation space in India," said Rajan Mehra, Chief Executive
Officer (CEO) at Club One Air and former India head of Qatar Airways.
In
response to the lenders' call for stake sale in the airline, only
Etihad Airways submitted a bid. The other three investors -- private
equity firm TPG Capital, Indigo Partners and National Investment and
Infrastructure Fund (NIIF), which had qualified in the expression of
interest (EoI), did not submit any financial proposal.
There were
also two unsolicited bids from foreign investors. The Hinduja Group on
Tuesday said that it was exploring options to buy a stake in the
crisis-hit airline.
"Hinduja Group is evaluating the Jet Airways opportunity," a spokesperson had said.
While
the idea of interested parties coming together and submitting a joint
bid appears to be a solution, the Chief Financial Officer (CFO) of a
large private firm said that it would be a complicated exercise.
As
per industry estimates, the debt-laden Jet Airways requires funds worth
Rs 15,000 crore but none of the investors have so far showed commitment
to infuse substantial funds. The sole bidder Etihad, which holds 24 per
cent stake in the airline, has proposed to invest only Rs 1,700 crore.
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