Farnair to hike stake in Tata-funded Quikjet

The meeting of the Foreign Investment Promotion Board next month won’t just take up Air Asia’s proposal of a maiden foreign direct investment (FDI) by an airline in a domestic passenger airline being co-promoted by the Tatas.

It will also discuss a proposal from Farnair Switzerland AG to hike its investment in Quikjet Cargo Airlines, where the Tatas are co-investors.

While foreign airlines were allowed only in September last year to acquire up to 49% stake in local carriers, they have been permitted since 2008 to buy up to 74% in cargo airlines.

Quikjet was formed in 2007, promoted by AFL Pvt Ltd, one of the largest players in the domestic logistics industry, along with Cardinal Aviation Pte Ltd, a private equity based out of Singapore.

Cardinal has divested its stake since then. Allschwil, Switzerland-based Farnair, which operates air cargo transport services across Europe, picked up a 36.2% stake in the airline in February last year, becoming its largest shareholder. AFL is now the second-largest shareholder with 20.8% stake, while Tata Capital and Tata Investments jointly hold 9.4%. Ajit Karnik and Infrastructure Leasing and Financial Services (IL&FS), with 14.8% and 13.14% stakes, respectively, are the other major investors.

“An application has been made with FIPB by Farnair to raise its stake in Quikjet,” said a source in IL&FS, without divulging further detail.

Farnair had invested $2.16 million at the time of picking up the stake and another $1 million in July, said officials.

@SumitMoitra