Kingfisher Airlines Ltd, which is in stake sale
talks with Abu Dhabi's Etihad Airwaysand
other investors, has capped foreign portfolio investment in the company at
three per cent, carving space for a foreign investor to buy as much as 46
percent of the embattled carrier.
India
allows foreign investment of up to 49 percent in local carriers. Foreign institutional investors currently hold 2.46 percent of
Kingfisher, according to stock exchange data.
Foreign
institutional investor interest in airline stocks has revived after the
government amended rules allowing foreign airlines to invest in Indian
carriers. Since last September, FII share holding in Kingfisher has fallen from
2.11 per cent to 0.34 (February) and 0.98 per cent (June) before climbing up to
2.46 per cent in September 2012.
According
to analysts, change in the business environment and end-to-discount pricing and
cut-throat competition are also responsible for increased investor interest.
FII holding in Jet Airways and SpiceJet was 4.81 per cent and 2.86 per
cent, respectively, in September.
Cash-strapped
Kingfisher, which was once India's No. 2 airline by domestic market share but
grounded its fleet early October, said earlier this week it was in talks with
Etihad Airways and other investors about taking a stake.(GLOBE FLYERS)
The
airline informed BSE that the decision to limit FII
investment was taken "with a view to keeping the company's capital
structure in readiness for transactions that may be identified in the future
for the benefit of all stakeholders of the company," Kingfisher said in a
statement on Thursday.
Kingfisher,
controlled by liquor tycoon Vijay Mallya, has been trying for more than a year
to find an investor, without success. It is saddled with $2.5 billion (around
Rs 13,620 crore) in debt, according to one estimate.
A
fresh cash infusion into the struggling carrier could come from a financial or
strategic, Indian or non-resident investor, Kingfisher said on Thursday. Shares
of the company closed 4.98 per cent higher at Rs 17.27 on Thursday, while the
BSE benchmark index, Sensex, shed 0.65 per cent to close at 19,229.26.
http://www.business-standard.com/india/news/kingfisher-fii-cap-to-make-room-for-investors/495573/
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