Branson tipped to invest in AirAsia X
A Star on line Malaysia report says that this Friday will mark a major milestone for Malaysia’s first long haul low-cost carrier, AirAsia X, with the entry of a big foreign investor, changing the airline’s fortunes and bringing foreign direct investment into Malaysia.
The report says that name of Sir Richard Branson has been bandied about as being the big investor and as last minute arrangements are being worked out in London, Branson is expected to attend the Friday event.
It is learnt that Branson, via the Virgin Group, would take up a 20% stake in the airline’s operator, Fly Asian Xpress.
The selling of the 20% stake in FAX is the first round of funding required by the airline to kick-start operations and partly pay for the 15 aircraft that FAX has ordered. It is learnt that with the sale, FAX should be capitalised at US$30mil.
Second Finance Minister Tan Sri Nor Mohamed Yakcop is expected to be the guest of honour at the event, scheduled to be held in Putrajaya and the completion of the signing ceremony would be a major coup not only for FAX but also Malaysia.
There would certainly be a lot of synergies as the Virgin group is not just an airline owner and operator but is also involved in mobile telephony, financial services, retailing, music, Internet services, beverages, rail services, hotels and the leisure business. It has about 200 companies in over 30 countries.
Certainly, some form of synergy can be derived from the full-fledged trans-Atlantic airline Virgin Atlantic and Virgin Blue, a low-cost carrier in Australia, among others.
With Branson taking up a 20% equity interest in FAX and another 20% expected to be sold to sister company, AirAsia Bhd, the remaining 60% in FAX would be held by a group of investors comprising AirAsia CEO Datuk Tony Fernandes, deputy group CEO Datuk Kamarudin Meranun, Raja Azmi Raja Razali, Datuk Seri Kalimullah Hassan, Lim Kian Onn and some senior FAX employees, including its CEO Azran Osman-Rani.
A second funding exercise to raise US$50mil to US$60mil via a share sale and borrowings would be initiated by year-end, pending completion of the first round. As for the 20% stake to be taken up by AirAsia, the proposal would have to obtain shareholders’ approval at an EGM to be convened later.
Report by The Mole
John Alwyn-Jones
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