Philippine carrier IPO raises over 500 mln USD, boosts capital market

20:01, October 26, 2010      

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Investors snapped up shares of Philippine budget airline Cebu Air Inc. in its stock trading debut Tuesday, boosting the country's capital market.

The largest airline in the Philippines and the third largest budget carrier in Asia raised at least 539 million U.S. dollars in its initial public offering -- surpassing IPOs held by budget carriers overseas.

Irish low cost airline Ryanair Holdings Plc only raised 160 million U.S. dollars in its IPO in 1997, while Malaysia's AirAsia Bhd.'s raised 220.32 million U.S. dollars in its IPO in 2004.

Analysts said that the airline's profitability, boosted by its positioning as a low cost carrier, spurred market participants to buy Cebu Air's shares.

Cebu Air sold 186.6 million shares or 30.4 percent of its outstanding stock. Seventy percent of which was taken up by foreign investors and the rest by local investors.

Cebu Air president Lance Gokongwei said proceeds from the IPO will be used to purchase new aircraft. This is in line with the company's goal to continue being a major player in the local airline industry by offering affordable fares and by making the country more accessible to foreign guests. "We aim to offer more services and increased frequencies as we expect delivery of 24 more brand new Airbus aircraft between 2010 and 2014. By 2014, we aim to fly 20 million passengers, twice our target for this year," he said.

Philippine Stock Exchange Chairman Hans Sicat said Cebu Air's listing is the second largest IPO in local stock market history.

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