About Airasia X

It is banking on retail participation to boost the take up of its impending IPO, will not have cornerstone investors.

Bankers familiar with the listing said this will be one of the few large offerings without cornerstone investors.

Besides offering what is to be the largest retail proposal allowed by the SC to date (May 2013), Airasia X is set to create another milestone in the history of Malaysia’s IPO as it does away with conventional cornerstone investors.

In the last few years, major IPOs in Malaysia have normally had a set of cornerstone investors – normally subject to a lock up period of six months. This is to ensure that there is some stability in the share prices in large offerings.

However Airasia X will have several anchor investors keen on taking up a long term position in the airline. It will keep it to about six or seven anchor investors and they will not subject to a lock up period.

The airline is offering 790 million shares and can raise up to rm1.15 billion assuming the shares are taken up at a higher end of the indicative range. It is offering 252 million shares or 10.6% of its enlarged share capital to retail investors.

A carrot for retail investors would be if they hold on to the shares for more than a year, they will receive sweeteners such as free flight tickets.

Sources say Airasia Bhd will holds a 18.3% stake in the company pre IPO, is also looking to pare down its stake to 15%.

Airasia X’s three largest shareholders are looking to reduce their interest are Aero Ventures Sdn Bhd is looking to trim down its stake to 34.4% from 52.2%, Orix Airline Holdings Ltd and Manara Malaysia I Ltd are seeking to reduce its stake in 6.4% each.

Upon the IPO, the three shareholders will hold on aggregate of 1.1 billion shares, which represent 47.2% stake of the company’s enlarged issued and paid up capital compared to a larger stake of 74% before the IPO.

On gross proceeds raised from the listing, the company plans to use 21.5% for capex, 43.8% for the repayment of bank borrowings, 31.5% for general working capital and the remaining 3.2% for listing expenses.

It has been categorized as syariah compliant. This will not only give the airline further mileage, but will lock in bumiputera investors in its soon to be traded shares.