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Singapore budget carrier Tiger Airways is facing investor indifference for its S$250 million initial public offering slated for January, and it could even withdraw the IPO if it can’t raise at least S$200 million, people familiar with the situation said Thursday.
“In November Tiger wanted to raise around S$500 million, but it was advised by the banks that’s not possible. They cut it down by half, but it’s still hard to raise the funds,” one of those people told Dow Jones Newswires.
Citigroup is joint bookrunner with Morgan Stanley on the IPO.
Another person said some investors want a lower pricing for the IPO and if the company “doesn’t manage to raise a minimum S$200 million, the listing won’t happen.”
A spokesman for Tiger Airways declined to comment.
According to the IPO’s term sheet seen by Dow Jones, the airline expects to lodge a preliminary prospectus with the Monetary Authority of Singapore on Dec. 21 and start the roadshow on Jan. 16.
The public offer will be launched on Jan. 13 and Tiger Airways expects to be listed on Jan. 22 on the Singapore Exchange.
It was not known whether the company’s main investor Singapore Airlines Ltd., which now holds a 49% stake, will buy into the IPO, but the second person said “SIA along with other big investors likely won’t get in and will let their stakes be diluted.”
The first person said Tiger’s shares are priced at a multiple of around 13 times forward earnings for 2011, which is more than double that of major competitors like Malaysia-listed AirAsia Bhd., which trades around six times.
Tiger has been suffering from the dramatic fall in air travel following the global financial crisis.
The carrier, which flies to Australia, China, India and Southeast Asia, will use the IPO proceeds to fund purchases of Airbus A320 planes and push on with its aggressive expansion in Australia.
An audited financial report for the 12 months ended March 31 shows Tiger Aviation, the holding company for Tiger Airways, had net liabilities of US$109.5 million and off-balance sheet capital commitments for aircraft and equipment of US$3.5 billion.
Tiger had a pretax loss of S$47.7 million in the same period.
