KUALA LUMPUR (May 2): The potential dual listing of Capital A Bhd (KL:CAPITALA) in Hong Kong will open further avenues for the diversified group to raise funds for expansion, according to chief executive officer Tan Sri Tony Fernandes.
The potential move comes as the group targets to complete its regularisation plan by mid-2025, moving closer to a Practice Note 17 (PN17) exit. The Hong Kong Stock Exchange (HKEX) listing is seen as a natural next step, according to Fernandes.
“Practice Note 17 [PN17] is coming to an end, and people are asking what our financing options are? What are you gonna do with Capital A once the airline is gone?” Fernandes told The Edge in an exclusive interview on Friday.
Fernandes said HKEX shared that investors have shown interest in a non-aviation Capital A. Based on initial valuations, a listing exercise may potentially raise US$200 million (RM856.4 million), he added.
“It's [the HKEX listing] all about raising capital. Raising capital for Capital A has been tough. So, if there’s a market that’s interested in helping us develop the six companies we have; that’s great,” Fernandes said.
Discussions are ongoing and an international investment bank is to be appointed to advise the group on the proposed listing structure and timeline.
Capital A’s regularisation plan includes carving out its core aviation business — AirAsia Bhd and AirAsia Aviation Group Ltd — to be sold to AirAsia X Bhd (KL:AAX) in a RM6.8 billion share-and-debt deal.
Post-disposal, the group will be left with six businesses: e-wallet and remittance unit BigPay; online travel agency AirAsia Move; maintenance, repair, and overhaul company Asia Digital Engineering (ADE); air logistics arm Teleport; in-flight catering business Santan; and branding business AirAsia brand co (ABC).
He noted that Hong Kong is home to a global investor base that is familiar with similar listed businesses and appreciates growth opportunities.
Shareholders of Capital A are to vote on the proposed regularisation plan in an extraordinary general meeting on May 7.
The aviation business sale was approved by shareholder in October last year. It is contingent on AAX raising RM1 billion via a private placement exercise.
Mum on sovereign wealth fund coming into AAX
On the placement, Fernandes confirmed the lead investor is a sovereign wealth fund but stopped short of identifying them.
“I can only tell you why the institutional investor has looked at us. One is it's a good investment, they’ve done their numbers — I think we’re very undervalued — and due diligence,” Fernandes said.
“Two, I think there’s some strategic benefit for that sovereign fund if AAX and Capital A can add value to that country,” he added.
Months back, Bloomberg reported that Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF), was set to take up US$100 million (RM427.5 million) of the placement.
Shares in Capital A ended 3.5 sen or 4.4% higher at 83 sen, valuing the group at RM3.58 billion. AAX shares closed eight sen or 4.97% higher at RM1.69, giving it a market capitalisation of RM755.55 million.