The Foreign Investment Promotion Board (FIPB) gave conditional approval to the proposal of InterGlobe Aviation, the holding company of IndiGo , for fresh foreign direct investment (FDI) in the carrier on Friday. The proposal has been cleared subject to approval of the High Court, an official said after a meeting of the FIPB.
As per the proposal, equity holding of IndiGo's promoter Rakesh Gangwal through Caelum Investments will be classified as NRI investment and free the FDI limit for fresh investment.
Gangwal through Caelum Investment ( incorporated in Delaware, US) holds 47.88 per cent stake in Inter-Globe Aviation. Rahul Bhatia owns the remaining stake in InterGlobe Aviation.
According to FDI rules, foreign companies and foreign airlines are allowed to hold up to 49- per cent stake in an Indian airline. NRIs are permitted to hold up to 100 per cent in an Indian carrier.
Currently, Gangwal's stake is classified as FDI even though a group of NRIs hold the majority stake in Caelum Investments.
As per sources, the proposal is that Caelum will be merged into InterGlobe Aviation.
The 147,000 equity shares held by Caelum in InterGlobe Aviation will be cancelled.
In a cashless transaction, InterGlobe Aviation will issue 1,47,000 equity shares having face value of Rs 1,000 to NRI owners of Caelum in proportion to the voting units held by them.
IndiGo has been exploring for a possible stake sale to Qatar Airways and the Emirates. A number of other foreign carriers too have expressed interest in buying stake in the airline.
The promoters, however, have not responded to those offers. Industry observers believe that IndiGo is the best airline to invest among domestic players because of a clean balance sheet.