IndiGo gets virtual FIPB nod to go ahead with FDI conversion

The Foreign Investment Promotion Board (FIPB) on Friday gave conditional approval to IndiGo Airline's proposal to convert its co-founder's 48 per cent foreign direct investment into non-resident Indian (NRI) investment so that it could pick up the 49 per cent stake, which an Indian carrier can now sell to foreign companies, airlines or foreign institutional investors.

"IndiGo's proposal has been cleared subject to approval of high court," an official said after a meeting of the FIPB, which is headed by finance secretary Arvind Mayaram.

IndiGo sought the approval just ahead of an impending IPO so that it can sell shares to FIIs too. A number of foreign airlines like Qatar Airways have expressed interest in buying into IndiGo.

IndiGo's holding company InterGlobe Aviation Ltd is currently 48 per cent owned by co-founder Rakesh Gangwal's US-based Caelum Investments. This investment falls under FDI and current rules allow an airline to have only 49 per cent FDI from foreign airlines and companies.

To free up the allowed 49 per cent FDI, IndiGo had sought FIPB nod to convert Gangwal's 47.9 per cent stake from FDI to investment under NRI. Conversion of Gangwal's stake from FDI to NRI will make IndiGo eligible for FDI.

Caelum Investments is also majorly owned by NRIs with Gangwal and his wife having 60 per cent stake in it. The plan is to merge Caelum with InterGlobe Aviation. In place of the 147,000 equity shares held by Caelum in InterGlobe Aviation, the latter will issue an equal number of shares at a face value of Rs1,000 each to the NRI members of Caelum.

Gangwal's Caelum holds a 47.88 per cent stake in InterGlobe Aviation, the remaining being owned by co-founder Rahul Bhatia's InterGlobe Enterprises Ltd.