Lion Air to launch long delayed IPO by year end

INDONESIA'S Lion Air is in the final stage of preparing to launch an initial public offering (IPO) that has been delayed multiple times

17 October 2019 - 19:00

INDONESIA'S Lion Air is in the final stage of preparing to launch an initial public offering (IPO) that has been delayed multiple times.

The airline plans to list before the end of 2019 on the Indonesia Stock Exchange (IDX) in a move to raise up to US$1 billion, marking the third-largest IPO ever on the Indonesian bourse, although the top end of that amount might be an over-ambitious goal.

While the bulk of demand for any IPO equity raise certainly will come from investors outside Indonesia, Indonesian law currently caps foreign ownership of locally flagged airlines at 49 per cent, reports American Shipper.

Lion Air is part of the Lion Air Group with Wings Air, Batik Air, Lion Bizjet, Malaysia-based Malindo Air and Thai Lion Air.

Lion Air also offers an integrated service called Lion Parcel that carries a large volume of shipments in the belly-hold of aircraft, transferring parcels to dedicated land transport vehicles for door-to-door delivery. E-commerce shipments represent about 50 per cent of Lion Parcel's total delivery volume.

Lion Air will have competition in raising capital on the Jakarta market. In spite of unfavourable global economic conditions, more than 20 companies have formally registered with the IDX to conduct IPOs before the end of the year.

Potential investors also will be aware of two recent serious problems.

In September, subsidiaries Malindo Air and Thai Lion Air were forced to acknowledge a data leak in which passenger data may have been stolen from remote servers. In addition, Lion Air is still reeling from the October 2018 loss of a B737MAX that crashed into the Java Sea shortly after takeoff, killing all 189 passengers and crew.

While Lion Air has not named underwriters, sources indicate that the share sale will be led by Ciptadana Sekuritas, Danareksa Sekuritas, Mandiri Sekuritas and MNC Sekuritas. Founded in 1999, Lion Air is Indonesia's largest privately held carrier and the second largest in Southeast Asia behind Malaysia-based low-cost carrier AirAsia.

Post-IPO, Lion Air will become the third airline listed on the IDX, following previous listings by Garuda Indonesia Group, parent of flag carrier Garuda, Garuda Indonesia Cargo and Citilink, and low-cost carrier AirAsia Indonesia.

Lion Air would use IPO proceeds to boost liquidity and fund the purchase of a large number of Airbus and Boeing aircraft.

Lion Air has been considering an IPO since 2005, although multiple attempts were put on hold due to a volatile rupiah and weak economy.


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