 | « Back to article | Print this article |
Jet Airways is offering 17,266,801 equity shares of Rs 10 each for cash to the public, according to the draft Red Herring prospectus filed with the Securities and Exchange Board of India on Friday.
It is a book-built issue and would constitute around 20 per cent of the fully diluted paid-up capital of the company. Of the total offer, the company is making a fresh issue of 14,245,111 equity shares and the balance 3,021,690 equity shares are an offer for sale by Tail Winds Ltd.
Tail Winds Limited, an Isle of Man company, holds over 99.99 per cent of the company's equity. Tail Winds is wholly owned by chairman and promoter Naresh Goyal.
After the public issue, this entity and Goyal will control approximately 80 per cent of the capital of the company.
According to the offer document the articles of association has been framed in such a way that the promoters and the Naresh Goyal group "have the ability to exercise significant influence over matters requiring shareholders' or directors' approval, even if their ownership interest in Jet's equity capital should be reduced significantly.
"This control could delay, defer or prevent a change of control of Jet, impede a merger, consolidation, takeover or other business combination involving the company, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the company."
Jet Airways has reserved 1,200,000 equity shares for subscription by employees at the offer price. Thus, the net offer to public would be 16,066,801 equity shares.
At least 60 per cent of the net offer shall be offered on a discretionary basis to qualified institutional buyers, up to 15 per cent has been reserved for allotment on a proportionate basis to non-institutional bidders and up to 25 per cent for retail investors. After the offer the capital would be 86,334,011 equity shares of Rs 10 each.
A whole host of merchant bankers are involved in the issue. The lead book running managers for the issue are Deutsche Equities India, HSBC Securities and Capital Markets (India), UBS Securities India, Citigroup Global Markets India, DSP Merrill Lynch and Kotak Mahindra Capital Company.
According to the prospectus, the authorised capital of the company is Rs 200 crore (Rs 2 billion) with Rs 130 crore (Rs 1.3 billion) of equity shares and Rs 70 crore (Rs 700 million) of preference shares.
In a recent research report, J P Morgan had said that Jet Airways controls around 41 per cent market share much more than "its actual capacity market share of 36 per cent." Compare this with Indian Airlines, which controls around 39 per cent of the capacity, but only 33 per cent of the passenger market.
For the year ending March 31, 2004, the company made a profit of Rs 149.20 crore (Rs 1.49 billion) against a loss of Rs 119.5 crore (Rs 1.19 billion) in the previous year. For the six months ending September 30, 2004, the company has recorded profit of Rs 68.40 crore (Rs 684 million). The company had made losses of Rs 31.20 crore (Rs 312 million) in fiscal 2002 as well though it had made profits in the previous two years.