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Tiger Air cuts IPO size
SINGAPORE budget carrier Tiger Airways plans to raise a smaller-than-expected S$200-250 million in its upcoming IPO, following lukewarm response from potential investors, sources said on Wednesday.
Tiger, 49 per cent owned by Singapore Airlines, will offer S$250 million worth of shares with an option to increase the issue size by 10-15 percent, a source briefed on the deal told Reuters.
A second source said Tiger will raise between S$200 million and $250 million - below the S$420 million it had hoped to raise initially following feedback from bookrunners Morgan Stanley and Citigroup.
Citigroup and Morgan Stanley declined comment, while Tiger's spokesman said the firm was considering an IPO as one of several options and declined to provide further details.
Tiger, which plans to use the money to buy new aircraft and repay existing debt, is scheduled to file a draft prospectus next week. Its investor roadshow will begin on Jan 6, the sources said.
The downsizing of Tiger's planned IPO highlights investor concerns about the airline industry, which has been battered by falling travel and cargo demand and a rally in fuel prices.
The International Air Transport Association (IATA) on Tuesday said the world's airlines are set to lose US$5.6 billion in 2010, up from a previous forecast loss of US$3.8 billion, as rising fuel prices offset a recovery in passenger and air cargo demand.
Tiger, one of Asia's more successful budget carriers, has grown rapidly since it started operations in Singapore in September 2004, turning a profit in its third year of service.
The carrier, which now also operates out of Australia, has 17 Airbus A-320 aircraft in service with orders for another 55 A-320s that will be delivered between now and 2016.
Its Singapore operations are profitable, but the carrier suffered a S$50.8 million loss for the financial year ended March 2009 due to costs incurred in starting up its Australia-based operations.
Besides Singapore Airlines, Tiger's other owners are: Singapore state investor Temasek, which holds 11 per cent stake; RyanAsia, a company controlled by the founding family of Irish airline RyanAir, with 16 per cent; and Indigo Partners LLC, an investment firm, which owns the remaining stake.
Sources said about 90 per cent of Tiger's IPO will comprise new shares with the balance coming from existing investors that want to cut their stake in the airline
Tiger, 49 per cent owned by Singapore Airlines, will offer S$250 million worth of shares with an option to increase the issue size by 10-15 percent, a source briefed on the deal told Reuters.
A second source said Tiger will raise between S$200 million and $250 million - below the S$420 million it had hoped to raise initially following feedback from bookrunners Morgan Stanley and Citigroup.
Citigroup and Morgan Stanley declined comment, while Tiger's spokesman said the firm was considering an IPO as one of several options and declined to provide further details.
Tiger, which plans to use the money to buy new aircraft and repay existing debt, is scheduled to file a draft prospectus next week. Its investor roadshow will begin on Jan 6, the sources said.
The downsizing of Tiger's planned IPO highlights investor concerns about the airline industry, which has been battered by falling travel and cargo demand and a rally in fuel prices.
The International Air Transport Association (IATA) on Tuesday said the world's airlines are set to lose US$5.6 billion in 2010, up from a previous forecast loss of US$3.8 billion, as rising fuel prices offset a recovery in passenger and air cargo demand.
Tiger, one of Asia's more successful budget carriers, has grown rapidly since it started operations in Singapore in September 2004, turning a profit in its third year of service.
The carrier, which now also operates out of Australia, has 17 Airbus A-320 aircraft in service with orders for another 55 A-320s that will be delivered between now and 2016.
Its Singapore operations are profitable, but the carrier suffered a S$50.8 million loss for the financial year ended March 2009 due to costs incurred in starting up its Australia-based operations.
Besides Singapore Airlines, Tiger's other owners are: Singapore state investor Temasek, which holds 11 per cent stake; RyanAsia, a company controlled by the founding family of Irish airline RyanAir, with 16 per cent; and Indigo Partners LLC, an investment firm, which owns the remaining stake.
Sources said about 90 per cent of Tiger's IPO will comprise new shares with the balance coming from existing investors that want to cut their stake in the airline
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