Indigo to partially exit Tiger Airways during IPO

The Singapore affiliate of US-based Indigo Partners stands to net up to S$16m from the $273m IPO of the Asian budget airline.

Tiger Airways Holdings, in which private equity firm Indigo Singapore Partners has a 24 percent stake, plans to raise up to S$272.5 million ($197 million; €135 million) from an initial public offering (IPO) in Singapore.

Indigo Singapore Partners, a Singapore affiliate of US-headquartered private equity firm Indigo Partners and founding shareholder in the Asian budget airline, could not be reached for comment at press time.

The Tiger Airways issue comprises about 9.6 million shares from Indigo, representing a 3 percent stake in the company before the offering, and approximately 155.6 million new shares, according to the company prospectus. The total offer represents a 30.6 percent stake in the company, post-IPO.

Each share will not be priced more than S$1.65, with the final price to be determined on 18 January 2010, states the prospectus. The shares are expected to begin trading on the Singapore Stock Exchange on 22 January 2010.  Based on the upper range of the share price, Indigo could net up to S$15.8 million from its partial exit.

The other founding shareholders of Tiger Airways are national carrier Singapore Airlines, which has a 49 percent stake; the private investment arm of Ireland’s Ryan family, RyanAsia, with a 16 percent stake; and Singaporean sovereign wealth fund Temasek, which holds the remaining 11 percent stake. None of these shareholders plans to divest shares in the offer.

Post-IPO, Singapore Airlines, Indigo, RyanAsia and Temasek will see their holdings in the airline diluted to 33.1 percent, 14.5 percent, 10.8 percent and 7.4 percent respectively. 

Tiger Airway intends to use up to S$166 million of the capital raised from share offer to fund the acquisition of aircrafts; up to S$10 million to set up a new operating base; about $50 million to repay short-term loans; and about $20 million for working capital. The company has debts of about $100 million as of 30 November 2009.

Founded in 2004, Tiger Airways operates from aircraft bases in Singapore’s Changi Airport Budget Terminal, Melbourne’s Tullamarine Airport and South Australia’s Adelaide Airport. The company’s route portfolio covers 33 airports across 11 countries and territories in Asia and Australia. It currently has 17 aircraft and aims to increase its fleet size to 68 by December 2015.

Indigo Singapore Partners is a private investment vehicle of William Franke, who is a managing partner at aviation-focused US private equity firm Indigo Partners. Previous Indigo Partners investments in budget airlines include Mandala Airlines in Indonesia, Wizz Air in Hungary and Spirit Airlines in the US.