Proceeds will be used to fund aircraft purchases and expand in region
Tiger Airways operates 17 Airbus 320 aircraft to 33 destinations but aims to boost its fleet size to 68 planes by the end of 2015. The company plans to expand its business in Singapore and Australia and establish new airlines in other Asian markets. -- PHOTO: BLOOMBERG
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TIGER Airways has declared its initial public offering (IPO) to be a roaring success after both the Singapore share sale and institutional global offering were heavily subscribed, garnering $247.7 million.
In the end, the low-cost carrier priced its shares at $1.50 apiece, a little below the maximum indicative price of $1.65.
The net proceeds, after fees and so forth, are set to come in at $233.3 million.
Tiger's IPO is the biggest since the listing of CapitaMalls Asia (CMA) in November last year, which raised $2.8 billion.
Tiger said last week that the bulk of the proceeds will be used to fund aircraft purchases to fuel network growth. The rest will be used to start new airlines and operating bases.
Based on the $1.50 price, the carrier will have a total market value of $781.3 million when it is listed on the Singapore Exchange on Friday.
Despite a shaky start, with several potential investors expressing scepticism over the airline's IPO plans, Tiger has proved the naysayers wrong.
At the end of the Singapore IPO at 10am yesterday, 27,072 valid applications had been received for about 260.1 million shares. That meant the Singapore public offer tranche was about 21 times subscribed.
An offering to institutional investors has received indications of interest amounting to 683.6 million shares.
On that basis, the placement tranche is set to be about 4.5 times subscribed.
Tiger Airways which operates two low-cost carriers, here and in Australia, launched its IPO last Wednesday, offering 165.2 million shares - 30.6 per cent of its enlarged share capital - at a maximum price of $1.65 a piece.
About 7.5 per cent of the total, or 12.4 million shares, had been reserved for retail investors and the rest went to institutional investors.
Tiger's fund-raising exercise comes at a time of recovery for the aviation industry, which has been battered by the global economic and financial crisis starting in September 2008.
The airline, which started operating in September 2004, reported losses of more than $50 million in the 12 months to March 31 last year.
But things are improving. In the first six months of the current financial year, losses were down to $8.3 million.
Tiger Airways operates 17 Airbus 320 aircraft to 33 destinations but aims to boost its fleet size to 68 planes by the end of 2015.
Elated Tiger president and chief executive officer Tony Davis said yesterday: 'We are absolutely delighted with the response to this IPO from both the retail investors in Singapore and major global institutional investors.
'We believe that the significant demand for shares in Tiger Airways from investors around the world is a strong vote of confidence in our low-cost business model and the growth potential of Tiger Airways.'
Looking ahead, the airline aims to continue expanding its business in Singapore and Australia as well as establish new airlines in additional markets in Asia.
Mr Davis did not specify the markets he intends to move into. He said: 'Tiger Airways is well-positioned to leverage the opportunities for growth in air travel in Asia and Australasia, the fastest growing aviation market in the world.'
With the share offering, Singapore Airlines' stake in the airline has been reduced from 49 per cent to 33.1 per cent.
Temasek Holdings, which had an 11 per cent stake in the airline, now owns 7.4 per cent. Other major shareholders are United States-based investment firm Indigo Partners and Ryanasia.
ON CLOUD NINE
'We are absolutely delighted with the response to this IPO from both the retail investors in Singapore and major global institutional investors.'
Tiger president and chief executive officer Tony Davis
Source: Straits Times, 19 Jan 2010.
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