Kingfisher imposes FII cap to make room for investor

NEW DELHI Thu Dec 13, 2012 12:40pm IST

Women walk past a closed booking office of Kingfisher Airlines in New Delhi October 1, 2012. REUTERS/Mansi Thapliyal/Files

Women walk past a closed booking office of Kingfisher Airlines in New Delhi October 1, 2012.

Credit: Reuters/Mansi Thapliyal/Files

Stocks

   

NEW DELHI (Reuters) - Kingfisher Airlines Ltd(KING.NS), in stake sale talks with Abu Dhabi's Etihad Airways and other investors, has capped foreign portfolio investment in the company at 3 percent, 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. Overseas institutional investors currently hold 2.46 percent of Kingfisher, according to stock exchange data.

Cash- and debt-strapped Kingfisher, which was once India's No. 2 airline by domestic market share but has grounded its fleet since the start of October, said earlier this week it was in talks with Etihad Airways and other investors about taking a stake.

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 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 have rallied recently and were up 5 percent - their daily limit - for the third consecutive day on Thursday. The shares, which were trading at 17.15 rupees in early trade, have recovered sharply from their all-time low of 7.05 rupees hit in August.

(Reporting by Anurag Kotoky; Editing by Chris Gallagher)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Economic Pulse

REUTERS SHOWCASE

Smartphone Wars

Smartphone Wars

Google's Android One adds to Samsung's worries.  Full Article 

India Services Activity

India Services Activity

Services growth slowed in August, orders waned.  Full Article 

Money Matters

Money Matters

Banks pile pressure on liquor baron Mallya over airline loans.  Full Article 

Moody's on India

Moody's on India

India's rating seen limited by fiscal deficit, inflation - Moody's  Full Article 

Political Pulse

Political Pulse

100 days of Modi: Good for business, not so good for marginalised groups.  Full Article 

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi.  Full Article 

China Economy

China Economy

China services activity rebounds but property remains a worry.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage