IPO of Asia Aviation is expected to raise Bt4.5 bn
Asia Aviation (AAV), the holding company of Malaysia-based Thai AirAsia, expects to raise Bt4.5 billion from the sale of 1.212 billion shares in its initial public offering and the funds will be used to increase its shareholding in Thai AirAsia and expand its fleet.The AAV stock will debut on the Stock Exchange of Thailand on May 31.
The IPO price has been set at Bt3.7. Of the total offering, 800 million shares have been sold to institutional investors and the remainder will be sold to retail investors from tomorrow until Friday.
Thanachart Securities and CIMB Securities (Thailand) are co-underwriters.
Tassapon Bijleveld, chief executive officer of Asia Aviation, said yesterday that the IPO price of Bt3.70 per share was appropriate. The issue among institutional investors locally and overseas was 11 times oversubscribed.
The company will use a part of the IPO proceeds to purchase Thai AirAsia's newly issued shares to increase capital. AAV will raise its stake in Thai AirAsia to 55 per cent from 51 per cent currently. AirAsia Investment (AAI), another major shareholder of Thai AirAsia, which is a wholly owned subsidiary of Air Asia Berhad, will reduce its shareholding to 45 per cent from 49 per cent.
The IPO shares represent 25 per cent of the paid-up capital of Bt410 million. After the IPO, the paid-up capital will be Bt485 million.
Tassapon said the rest of funds from the IPO would be used to buy new aircraft, as the company targets expanding Thai AirAsia's fleet to 48 planes over the next five years.
Thai AirAsia currently operates a fleet of 24 Airbus A320s and covers 28 destinations in eight countries. This year it will purchase three new aircraft. He said the airline projected the number of passengers to reach 8 million this year, up from 7.2 million passengers last year, and the cabin factor is expected to rise to 81-82 per cent from 80 per cent last year.
Suvabha Charoenying, managing director of Thanachart Securities, said that even though the market sentiment had seemed to take a downturn, AAV's foundation was strong in terms of revenue and profit. The growth rate of 20 per cent in both revenue and profit is able to attract investors. Moreover, Thai AirAsia is the market leader in low-cost airlines with a market share of 60 per cent.
AAV has no debt burden, as it can clear its accumulated loss in the first quarter of this year.
Thai AirAsia had a net profit of Bt627 million in the first quarter, while revenue this year is expected to grow to Bt20 billion from Bt16 billion in 2011, Tassapon said.
He noted that the aviation business this year remained under pressure due to the European debt crisis and the local political situation, saying that both could influence tourism and aviation. However, past records have shown that Thai AirAsia outperforms the market.
Tassapon said that although there are other new low-cost airlines in the Asean market, there were not enough to serve growing number of passengers in Asean.
He added that Thai AirAsia needed one or two months to finalise its move to Don Mueang Airport because it would have to consider carefully the convenience of the terminal and runways.
Prime Minister Yingluck Shinawatra earlier ordered that all low-cost airlines must move back to Don Mueang to improve air traffic at Suvarnabhumi Airport.