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AirAsia Explores India Unit IPO and Seeks Partner for Services Business

Atheer – External Sources

Malaysia-based AirAsia is considering an initial public offering for its Indian unit and seeking a partner for its services business, group chief executive Tony Fernandes revealed on Wednesday.

According to Reuters, this is the latest in a series of asset monetisations being undertaken by the budget airline group, which this week received approval from shareholders to make AirAsia Group Bhd the listed holding company for assets across Asia.

AirAsia has already completed a backdoor listing of Indonesia AirAsia TBK PT and finalised a $89.38 million joint venture for its ground-handling business with Singapore’s SATS Ltd. Its Philippine unit is looking to raise up to $250 million via an IPO in mid-2018.

AirAsia will seek approval at the next AirAsia India board meeting to pick a banker to start a preliminary process for an IPO, Fernandes posted on Twitter on Wednesday.

While analysts are “giving zero value to AirAsia India,” the unit is a “very valuable asset with huge growth potential,” he said in separate tweets, adding the subsidiary “was not far from 20 planes and a potential IPO.”

“AirAsia India is still incurring start-up losses and in negative equity so it is challenging to ascribe much value to the business at this point,” said Corrine Png, the CEO of transport research firm Crucial Perspective.

However, she said if the Indian venture grew its fleet to twenty and turned profitable, AirAsia’s 49-percent stake could be worth $200 million based on listed Indian airline rivals.

Fernandes said that AirAsia was also in the process of appointing a banker to find a partner for its shared services centre business, AirAsia Global Shared Services, which provides accounting services and data management for its airlines. Png said however that the value of that business would be insignificant, at around $249,563.26.

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