All Nippon Airways Co. (9202), Japan’s largest carrier, announced a 211 billion yen ($2.6 billion) share sale as it seeks new funds before Japan Airlines Co.’s planned initial public offering.
ANA will offer 1 billion new shares, including an overallotment option, with pricing set for July 18 at the earliest, according to a statement yesterday. Japan Air will raise at least 500 billion yen in an IPO in September at the earliest, two people familiar with the matter said in January.
“ANA has a first-mover advantage given both airlines would be approaching a similar potential investor base,” said Nicholas Cunningham, an analyst at Macquarie Capital Securities (Japan) Ltd. in Tokyo. “We aren’t certain as to the scale of demand for Japanese airline equity issuance following ANA.”
Tokyo-based ANA is seeking money to help pay for new Boeing Co. (BA) 787 planes and for possible investments in other Asian carriers. JAL, which exited bankruptcy last year, may hold Japan’s second-largest IPO since 1998 as it returns to the stock exchange following a state-backed turnaround.
ANA is changing its corporate structure into a holding company from April 1, so it can more easily support different brands. In addition to its main unit, the company has stakes in budget carriers Peach Aviation Ltd. and AirAsia Japan Co., which are both starting flights this year.
“We’re always looking at ways to expand and take more of the expanding market in Asia, which includes M&A,” said Megumi Tezuka, a spokeswoman at ANA. The share sale “will help us take advantage of opportunities if they arise.”
The airline is seeking a price of as much as 211.1 yen a share, based on its statement. That’s 8.3 percent more than today’s closing price. The sale will boost the number of outstanding shares by about 40 percent.
Nomura Holdings Inc. (8604), Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), and Deutsche Bank AG (DBK) will manage the ANA share sale. The carrier also raised 143 billion yen in a 2009 stock sale to help fund new planes, as well as 97 billion yen in 2006.
ANA plans to spend 577 billion yen on outstanding plane orders, having already paid 253 billion yen, it said. Its backlog consists of 49 Boeing 787s, five 777s, 10 737s, 15 Mitsubishi Aircraft Corp. regional jets and three Bombardier Inc. turboprops.
The airline received the first of 55 fuel-efficient Dreamliners last year as it expands overseas services, including the start of flights to Seattle and San Jose. The carrier is also cooperating with United Continental Holdings Inc. (UAL) and Deutsche Lufthansa AG to boost international sales as well as taking advantage of increased capacity at Tokyo’s two main airports.
“Our growth is focused on expanding our international services,” Shinichiro Nakagawa, a deputy director for finance and accounting, said in an interview yesterday. “The funds will help us make the best of expansions at Narita and Haneda.”
The carrier has said net income may rise 42 percent this fiscal year to 40 billion yen because of cost cuts and a rebound in travel demand following the March 2011 earthquake and tsunami. Sales may rise 6.3 percent to 1.5 trillion yen, it said in April.
Japan Air, the nation’s second-largest carrier, has filed a share sale application, and it plans to seek as much as 600 billion yen in September, Kyodo News reported June 20, without citing anyone.
The carrier, which delisted in 2010 after filing for bankruptcy protection, has said IPO proceeds will be used to pay back Enterprise Turnaround Initiative Corp. of Japan, the state- backed fund that became its biggest shareholder in the restructuring.
The government is also preparing to sell shares of Japan Tobacco Inc., while Kawasaki Kisen Kaisha Ltd. (9107), Japan’s third- largest shipping line, announced plans for a 28.6 billion yen share sale earlier this week. Train and hotel operator Seibu Holdings Inc. has also hired banks for an IPO, a person with knowledge of the matter said in May.
“There are a lot of share sales coming up,” said Ryota Himeno, a Tokyo-based Barclays Plc analyst. “The first ones could be the winners.”
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