Founder of India’s beleaguered Jet Airways quits

Jet Airways founder Naresh Goyal has stepped down as chairman and left the company board. (AFP)
Updated 25 March 2019
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Founder of India’s beleaguered Jet Airways quits

  • Naresh Goyal leaves carrier as part of a rescue plan agreed with its lenders
  • Jet Airways has debts of more than $1 billion

NEW DELHI: Jet Airways Chairman Naresh Goyal will step down from the board and reduce his stake in the cash-strapped Indian carrier, the company said on Monday as it closes in on a rescue deal led by state-run banks.

The banks, led by State Bank of India (SBI), will convert their debt into equity and take a controlling stake in the airline for a token sum of 1 rupee ($0.0145), Jet said in a statement to the stock exchanges after its board met earlier on Monday.

The banks will also give the airline a fresh loan of $217.71 million (15 billion rupees) to meet payments and restore normal operations and the lenders will form an interim management committee to manage the airline, Jet said.

Saddled with debt of more than $1 billion, Jet owes money to banks, suppliers, pilots and lessors — several of whom have started terminating leases with the carrier.

The government has asked state-run banks, led by SBI, to rescue Jet without pushing it into bankruptcy, two people within the Indian government have told Reuters, adding that Prime Minister Narendra Modi is seeking to avert thousands of job losses weeks before a general election.

In its statement, Jet said the banks will initiate a bidding process to sell their stake in the airline to a new investor and that the process is expected to be complete by end-June.

Reports of Goyal’s departure led to a rally in Jet’s shares, which ended the day 12.4 percent higher.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.