Tiger Airways IPO: exciting but not encouraging?


It's exciting news! Tiger Airways will soon launch its IPO! Or perhaps not.

Not that exciting, I mean. As early as 5 Dec this year (or actually 21 Nov), Tiger Airways was reported to plan for IPO to raise up to S$694 million.

Compare that amount with the latest news which has the figure revised downwards to about S$200 million to S$250 million. Perceived lack of interest, eh Tiger?

I will definitely give this counter a miss.

Budget carrier Tiger Airways said on Monday it has informed the central bank of its plans to list on the Singapore Exchange ahead of an initial public offering (IPO).

The airline said in a statement it 'has lodged its preliminary prospectus with the Monetary Authority of Singapore on Dec 21 in connection with a proposed listing on the main board' of the Singapore Exchange.

Dow Jones Newswires said the prospectus did not spell out how much money Tiger Airways plans to raise or the percentage of shares it plans to sell through the IPO.

But sources had earlier said Tiger is looking to raise S$250 million (US$178 million) through the initial shares offer scheduled next month.

Tiger Airways, which is 49 per cent owned by Singapore Airlines, flies from Singapore to destinations across Asia and to the Australian city of Perth. It also operates domestic services in Australia.

From Straits Times, "Tiger Airways seeks IPO".

Budget carrier Tiger Airways has confirmed that it’s seeking a listing on the Singapore Exchange mainboard.

The airline said in a statement on Monday that it has lodged its preliminary prospectus with the Monetary Authority of Singapore.

Earlier media reports had said that Tiger may raise about S$200 million from an initial public offering (IPO).

The budget airline, which began flying in September 2004, is part-owned by Singapore Airlines.

According to the draft prospectus, Singapore Airlines and state investor Temasek Holdings will not sell their shares in the budget carrier in its planned IPO.

The carrier also announced that it has appointed Gerard Ee as its new chairman.

Mr Ee is also currently chairman of the National Kidney Foundation.

He replaces Daniel Ee, who is retiring.

Tiger also appointed three new independent directors -- Po'ad Mattar, a senior partner from Deloitte & Touche, Rachel Eng, a partner in law firm WongPartnership and Yap Chee Keong, who sits on the board of several companies in Singapore and Australia.

The new board members replace Soo Kok Leng, Declan Ryan and William Franke, who are retiring.

From Channel NewsAsia, "Tiger files IPO prospectus with MAS".

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.

From Asiaone, "Tiger Air cuts IPO size".

And previously on 05 Dec 2009 news about the much larger amount of IPO that Tiger Airways had aimed for:

Reports from Singapore yesterday indicated the airline was considering an IPO of $US300-$US500m as early as the first quarter next year and it has hired DBS Group to help manage the float.

A source told Dow Jones Newswires the funds were needed to fund Tiger's expansion in Australia as well as the purchase of 50 new Airbus A320 aircraft already under order.

A Reuters report said 49 per cent shareholder Singapore Airlines had agreed to the float and Citigroup and Morgan Stanley were joint book-runners.

Tiger confirmed an IPO was one option being considered by its shareholders.

Renewed rumours of a Tiger IPO surfaced last month after Singapore Airlines chief executive Chew Choon Seng told analysts it was "a project in progress" but no definitive schedule had been set.

But Mr Chew told a November 11 analysts' briefing that he could not speak for other shareholders, which included Singapore government investment arm Temasek and the Ryan family, and he did not want to pre-empt a decision.

Tiger has been slowly growing its Australian footprint and announced last month it would expand its network to Brisbane from March 28.

This gives the low-cost carrier a foothold in the nation's five biggest cities and will bring the number of Tiger routes to 18.

Chief executive Tony Davis recently indicated Tiger planned to add more planes in Australia.

Mr Davis said the airline was here for the long haul.

"Slowly but surely we keep adding routes and we keep adding more aircraft to the bases and I think that's going to be the theme going forward into 2010."

From The Australian, "Tiger Airways is planning $540m IPO".

...and even before that on 21 Nov 2009:
Singapore low-cost carrier Tiger Airways is considering an initial public offering (IPO) of at least US$500 million (S$694 million) some time next year, the Wall Street Journal reported, quoting a person familiar with the situation.

'At this time, they are considering a US$500 million minimum, but it could change. They have the agreement of shareholders. They need to fund their expansion in Australia and the purchase of new planes,' the person said on Thursday, adding that Tiger Airways is considering listing 30 per cent of its share capital.

Tiger Airways, 49 per cent owned by Singapore Airlines, is one of the biggest budget carriers in South-east Asia, with 25 destinations in Asia and Australia.

From Asiaone, "Tiger Airways may launch IPO".



Update on 07/01/10: An indicative price of $1.35 to $1.65 per share is revealed today. The amount raised will be up to $273 million.

TIGER Airways plans to raise up to $273 million in an initial public offer this month, according to a term sheet seen by Reuters, braving a still struggling air market in the first listing of an Asian airline in almost five years.

Tiger, whose owners include Singapore Airlines and Singapore investment company Temasek, is selling around 165 million shares, or about 30 per cent of its enlarged share capital, to raise funds for aircraft purchases.

The money raised will also be used to set up a new operating base for Tiger as well as pay off some existing debt, the term sheet said.

Tiger's IPO, downsized from an earlier estimated figure of around $300-350 million, comes amid concerns about the health of the global airline industry, which has been battered by falling travel and cargo demand and a rally in fuel prices.

The tough environment has pushed some traditional airlines, including Japan Airlines, to the brink of bankruptcy, and even low-cost carriers such as Tiger have been affected.

Rival budget carriers AsiaAsia and Jetstar, the budget airline owned by Australia's Qantas Airways Ltd, announced yesterday that they will form a non-equity alliance to cut costs, a further sign that budget airlines were feeling the burden of the aviation industry downturn.

Tiger set an indicative price of $1.35 to $1.65 a share for its offer, valuing the shares at 11.4 to 13.9 times forecast 2011 earnings.

Its IPO is the first by an airline in Asia since India's Jet Airways in February 2005, according to Thomson Reuters data.

About 94.2 per cent of Tiger IPO comprises new shares while the balance 5.8 per cent are vendor shares currently held by Indigo Partners.

RyanAsia, a company controlled by the founding family of Irish budget airline RyanAir, will divest some of its stake in Tiger if an overallotment option is exercised.

Singapore Airlines, which currently owns 49 per cent of Tiger, and Temasek will remain invested, although their stakes will be diluted after the IPO.

Tiger has grown rapidly since it began operations in Singapore in September 2004 and briefly turned profitable in its third year of service.

The carrier posted a $50.8 million loss for the financial year to March 2009 due to costs incurred in starting up its Australia-based operations.

Tiger has 17 Airbus A320 aircraft in service with orders for another 55 A320s that will be delivered between now and 2016.

Morgan Stanley and Citigroup are bookrunners for Tiger's IPO.

Tiger's investment roadshow began yesterday and the pricing of its share is scheduled to take place on Jan 16.

From Busines Times, "Tiger eyes up to $273m from IPO".



Update on 14/01/10: the IPO launch aimed at raising $247m to fuel ambitious growth plans. I will still give it a miss, though.

LOW-COST carrier Tiger Airways celebrated the launch of its much-anticipated initial public offering yesterday by giving away air tickets for next to nothing.

The airline, which aims to raise $246.8million when its IPO takes off later this month, is offering 165.2 million shares - 30.6 per cent of the company - at $1.65 apiece with trading expected to start on Jan 22.

To commemorate the share sale, Tiger has released 16,500 one-way seats to some destinations including Kuala Lumpur, Langkawi and Phuket for $1.65 each, including taxes.

Bookings are now open for travel between July and October.

The airline, the first low-cost carrier which will be listed on the Singapore Exchange, will use the bulk of the cash raised to buy new planes in order to fuel its ambitious growth plans.

Tiger operates 17 Airbus 320 aircraft to 33 destinations but aims to boost its fleet size to 68 planes by the end of 2015.

From Straits Times, "Tiger shares at $1.65".



Update on 18/01/10: Tiger Airways IPO is said to be priced at $1.50? Compare that to the earlier news above (which stated the offer price at $1.65). Selling at a discount to make this unattractive counter attractive? Not for me, thank you!

Budget airline Tiger Airways said on Monday it had raised S$247.7 million (US$178 million) in its initial public offering to help fund its ambitious plans in the growing Asian market.

The IPO, the first by an Asian carrier in five years, was priced at 1.50 dollars per share and means the Singapore-based carrier will have a market capitalisation of 781.3 million dollars, Tiger Airways said in a statement.

The funds raised will go towards mainly aiding Tiger Airways' plans to expand into the region where air travel demand is tipped by industry analysts to continue growing at a rapid pace.

"Going forward, we aim to continue growing our airlines in Singapore and Australia as well as establishing new airlines in additional markets in Asia," chief executive Tony Davis said in the statement.

"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," he said.

Shares of Tiger Airways are to begin trading on Friday on the Singapore Exchange.

Tiger Airways, which is 49-percent owned by Singapore Airlines, is competing with Jetstar Asia and Malaysia's AirAsia, among others.

It said in a statement last week it would set aside 166 million dollars of the proceeds from the IPO to pay for the planned purchase of new jets.

The carrier wants to expand its current fleet of 17 Airbus A320s to 68 by December 2015 as it plans to fly to more destinations within the region and in Australia.

It is also looking to establish new operating bases and airlines when the opportunities arise, as well as repay short-term loans.

Tiger said the region was poised to be the biggest travel market by 2020 and was aiming to expand its route network to take advantage of growing demand for air travel.

Tiger, which began its first commercial flights in September 2004, flies from Singapore to destinations across Asia including popular holiday spots such as Penang in Malaysia, and Bangkok and Phuket in Thailand.

It has also expanded into Australia where it offers domestic flights between key cities and towns across the continent.

In its prospectus, Tiger said it made a net loss of 50.8 million dollars and revenues of 378 million dollars in the financial year ended March 2009 compared to a profit of 9.9 million dollars on income of 303.8 million dollars in the previous year.

In the six months to September 2009, losses totalled 8.3 million dollars which was smaller than the 25.2 million dollars recorded in the same period the year before.

From Channel NewsAsia, "Tiger Airways raises US$178m in IPO".

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