Air India strategic disinvestment completed
- The Air India strategic disinvestment transaction has been completed today with Government receiving a consideration of Rs.2,700 crore from the Strategic Partner (M/s Talace Pvt Ltd, a wholly owned subsidiary of M/s Tata Sons Pvt Ltd), retaining debt of Rs.15,300 crore in Air India and AIXL and transferring shares of Air India (100% shares of Air India and its subsidiary AIXL and 50% shares of AISATS) to the Strategic Partner.
About the Deal:
- It is pertinent to mention that following Government’s approval of the highest price bid of M/s Talace Pvt Ltd for strategic disinvestment of Air India, the Letter of Intent was issued to the winning bidder on 11 October 2021.
- The Share Purchase Agreement (SPA) was signed on 25 October, 2021.
- Thereafter, Strategic Partner (M/s Talace Pvt Ltd), Air India and the Government worked towards satisfying a set of conditions precedent defined in the SPA including approvals from anti-trust bodies, regulators, lenders, third parties, etc.
- These conditions have since been met to mutual satisfaction.
- Disinvestment meanssale or liquidation of assets by the government, usually Central and state public sector enterprises, projects, or other fixed assets.
- The government undertakes disinvestment toreduce the fiscal burden on the exchequer, or to raise money for meeting specific needs, such as to bridge the revenue shortfall from other regular sources.
- Strategic disinvestmentis the transfer of the ownership and control of a public sector entity to some other entity
- The Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance is the nodal department for the strategic stake sale in the Public Sector Undertakings (PSUs).
- Strategic disinvestment in India has been guided by the basic economic principle that the government should not be in the business to engage itself in manufacturing/producing goods and services in sectors where competitive markets have come of age.
Source: THE HINDU.