Jet Airways promoter Naresh Goyal has agreed to sell his controlling stake in the cash-strapped airline and give up operational control, multiple sources familiar with the matter told CNBC-TV18 on Wednesday.

"After multiple conversations with prospective investors, it's clear that investors would not want to invest in Jet if Goyal retains his control over the company- operationally and from an equity perspective," said a source familiar with the development.

"Goyal has agreed to sell controlling stake in the company to an investor and has communicated the same to three strategic investors they are talking to at this point - Tata Group, Etihad and a consortium of Air France, KLM and Delta."

But Goyal, the airline's founder, has a few conditions. He has sought to retain a minority stake of below 5 percent and a board seat on the firm.

When contacted, a Jet Airways spokesperson said, "As per policy we cannot comment on market speculation."

At 10:40AM, shares of Jet Airways recouped intra-day losses and jumped 8 percent to Rs 317 on the Bombay Stock Exchange following the CNBC-TV18 news report.

Capital Infusion Not Enough

Jet Airways, which is partially owned by Etihad Airways of Abu Dhabi, has about $1.1 billion in debt and needs $300 million of immediate cash infusion.

When Jet Airways promoters started hunting for investors to recapitalise the struggling carrier, the plan was to bring in an equity investor who can infuse fresh capital and acquire a minority stake in the airline.

Goyal, who owns 51 percent stake, was clear that he did not wanted to let go of the company that he founded and nurtured since 1992.

But with the noose tightening and cash crunch becoming more severe, it's evident now that an investor is needed and fast.

The talks started with Goyal approaching private equity (PE) players, but most of them were interested in Jet Privilege Pvt. Ltd, its frequent flyer programme, and not in the airline.

Soon it became evident to the promoters that a 10-15 percent fresh infusion of capital would not lift the fate of the airline. That's when Goyal and the top Jet management began to reach out to strategic investors like the Tata group and Delta.

Also Read- Timeline: The turbulent journey of Jet Airways

Earlier this month, Indian conglomerate Tata Sons Ltd said it was in preliminary talks with debt-laden Jet, but has not made a proposal to acquire a stake.

"Goyal has told investors that he wants what's best for the company and that's why he is willing to let go of control. But he believes him staying on as a minority investor will ensure better transition. Add to that he has clearly told investors that the capital requirement is $1 billion to stir a turnaround for Jet Airways," one of the sources said.

Deal Talks Advance

The airline is in talks with all the three strategic investors but Tata Group and Etihad seem to be more likely than the consortium of Air France, KLM & Delta, said sources.

Tata Group, sources said, wants to buy a controlling stake and merger with its existing airline, Vistara.

Tatas are open to Goyal retaining a minority stake and Etihad staying on as a minority investor but seeks at least a portion of Etihad stake in the company.

For Etihad, the structure is different due to the FDI guidelines in India which permits up to 49 percent investment by a foreign company in the local firm. If the Etihad deal works out, Etihad will raise its stake to 49 percent from 24 percent and buyout portion of Goyal's and stake and infuse fresh capital.

According to sources, Etihad wants to take over operational control of the airline, and since Goyal's stake will reduce, it will give Etihad the larger pie.

However, Etihad has had its share of turbulence in the global market. So while a deal is being discussed between the two, Etihad may not have the bandwidth to invest $1 billion, said the sources.

Tata group, in a earlier statement, had said they were in preliminary talks with Jet Airways. CNBC TV18 is still awaiting comments from investors.

Disclaimer: Vistara is one of the four launching partners of CNBCTV18.com.

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First Published:Nov 28, 2018 10:38 AM IST