AirAsia Berhad : AirAsia X Likely to Delay $250 Million IPO Until After Malaysia Polls -Sources
02/15/2013| 05:21am US/Eastern
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By Abhrajit Gangopadhyay
KUALA LUMPUR--AirAsia X Bhd., the long-haul arm of Southeast Asia's largest budget carrier by fleet size, is likely to delay a planned $250 million initial public offering in Malaysia until after general elections are held, two people familiar with the process said Friday.
AirAsia X, a unit of AirAsia Bhd. (5099.KU), had planned to list by March, one of the people said. "The elections will likely cause a slight delay," the person said.
Investors in Malaysia's equity markets often turn jittery before and immediately after general elections. In 2008, the 30-share benchmark Kuala Lumpur Composite Index tumbled nearly 10% on the first day of trading after the National Front coalition, which has ruled Malaysia since independence in 1957, lost its two-thirds majority in Parliament for the first time.
"It is smart to let the election risk pass, so that investors can take better-informed decisions," the second person said.
Malaysia's general elections are required by law to be held by June 27, but are widely expected to take place earlier.
State-run news agency Bernama on Thursday quoted Prime Minister Najib Razak as saying Parliament could be dissolved "very, very soon."
Last year was a banner year for IPOs in Malaysia, which vaulted to fifth place globally by deal value. It is expected to struggle to retain that ranking this year, but a number of big-ticket deals, such as power producer Malakoff Corp Bhd.'s planned $1 billion IPO, will help keep the country in the deals headlines.
In any case, it looks to be a busy market year for AirAsia. Chief Executive Tony Fernandes told The Wall Street Journal last month that the group hopes to list Indonesia AirAsia, in which it holds 49%, on the Jakarta stock exchange in the third quarter.
AirAsia X still plans to sell up to 790 million shares--equivalent to a one-third stake--in its IPO, one of the people said.
According to the draft prospectus, 685.6 million shares were to be allotted to institutional investors and 104.4 million shares to retail investors.
More than half of IPO proceeds will be used to repay bank loans, while around a fifth will fund capital expenditure, including the purchase of equipment and spare parts for aircraft, the prospectus said.
The company hasn't disclosed the pricing, the size or the listing timeframe of the proposed IPO.
AirAsia X owns a fleet of nine Airbus A330-300s for scheduled services and has two A340-300s for wet-lease and charter operations flying to 12 destinations across Asia and the Middle East.
The company has appointed CIMB Investment Bank as its principal adviser to the IPO. Maybank Investment Bank, CIMB and Credit Suisse are the joint global coordinators.
-Write to Abhrajit Gangopadhyay at abhrajit.gangopadhyay@dowjones.com
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