Singapore Airlines and Temasek Holdings will not be divesting their Tiger Airways shares during the budget carrier's upcoming initial public offering (IPO), according to a draft prospectus filed yesterday.
Indigo, which owns 24 per cent of Tiger, will divest part of its stake, while the family that owns Ryanair and 16 per cent of the Singapore budget carrier will cut its stake if an overallotment option is triggered.
Tiger, which is 49 per cent owned by Singapore Airlines, plans to raise between S$200-250 million in its IPO to fund the purchase of planes and pay down loans.
Tiger also announced the appointment of its chairman, Mr Gerard Ee Hock Kim, and three additional Independent Directors - Mr Po'ad Bin Shaik Abu Bakar Mattar, Ms Rachel Eng Yaag Ngee and Mr Yap Chee Keong - to its Board of Directors yesterday.
Mr Ee is an independent director and has a background with auditing firms such as PricewaterhouseCoopers and Ernst & Young where he was an audit partner.
Citigroup, DBS Bank and Morgan Stanley were hired to help with the share sale, according to an offer document the airline filed with the Monetary Authority of Singapore.
The IPO will help chief executive officer Tony Davis pay for US$4.8 billion (S$6.7 billion) of new planes, as Tiger increases its fleet to challenge AirAsia.
"They need the money to expand, especially as travel is starting to pick up," said Mr Kelvin Lau, a Hong Kong-based analyst at Daiwa Institute of Research.
"Low-cost carriers such as AirAsia have been doing very well during this crisis."
Said analyst Rohan Suppiah with Kim Eng Securities in Singapore: "It's always good to have a listed vehicle to expand your funding options."
Tiger, seeking to emulate the success of discount carriers such as Ryanair Holdings Plc, started operations from its base in Singapore in 2004. It has added hubs in Melbourne and Adelaide over the past five years.
Indigo Partners LLC is the secondbiggest shareholder in Tiger with a 24 per cent stake. RyanAsia and Temasek Holdings hold 16 per cent and 11 per cent, respectively.
Tiger "can probably sell the recovery story better than a year ago, with the increase in passenger traffic", said analyst K. Ajith with UOB-Kay Hian Research in Singapore.
Other airlines including PT Garuda Indonesia, the nation's biggest carrier, and Vietnam Airlines Corp are also planning to sell shares in IPOs next year.
Cimber Sterling A/S, a Danish low-fare airline, sold shares in an initial offer this month in Copenhagen.