Lion Air to decide on IPO plans by month-end

INITIAL PUBLIC OFFERING (IPO) - SINGAPORE. Indonesia's Lion Air will decide by the end of the month when to proceed with its planned initial public offering (IPO) in the face of reduced investor appetite for the sector because of the coronavirus outbreak, said sources close to the matter.

Banks involved in the expected $500 million IPO of one of Asia's largest budget airlines have completed investor presentations in Singapore, Hong Kong, Jakarta, Europe and the United States, the sources said.

"People like the Indonesian market and the story of investing in a fast-growing airline, but the question is more about timing," said one source who declined to be identified because he is not authorised to speak to the media.

Sources had previously said that Lion Air could launch the IPO as early as March.

Lion Air is part of the Lion Air Group, which has airline joint ventures in Malaysia and Thailand and also operates airports in Indonesia as well as aircraft maintenance facilities.

The pre-marketing for the IPO included a combination of face-to-face meetings and phone calls because travel was restricted owing to the coronavirus, sources said.

The outbreak of the flu-like virus has killed more than 1,300 people in China and spread to more than two dozen countries, leading to cancellations of thousands of flights to and from mainland China.

"This is a bigger-picture decision on what has to be done. When the entire airline sector is challenged, it's not a helpful backdrop for the IPO," said one source.

BNP Paribas and Morgan Stanley are the international banks leading the deal. Both banks and Lion Air declined to comment.

The carrier, which has 112 planes, plans to use proceeds from the IPO to fund longer-term leases more akin to owning planes, as well as general operations. Lion Air has large outstanding orders for new jets from both Boeing and Airbus.

Reuters reported last week that the spread of the coronavirus had put key meetings and roadshows on hold and several auctions of assets were facing delays or reassessments.

Lion Air, which vies with state-run airline Garuda Indonesia for dominance in its home market, has been seeking to win over investors for more than a year since the fatal crash of one of its Boeing 737 MAX jets.