Air Arabia’s AED2.5 billion (US$680 million) IPO opens on March 18

Published March 15th, 2007 - 01:43 GMT

Air Arabia, the Middle East’s first low-cost carrier, today shared details of its upcoming initial public offering (IPO), scheduled to open on March 18, 2007. Upon completion of the IPO, Air Arabia shares will be listed on the Dubai Financial Market.


Air Arabia is the first airline in the Middle East to go public. The total size of the offering is AED2,566,700,000 consisting of 2,566,700,000 shares, representing 55 per cent of the company’s share capital, at an offer price of AED1 per share, in addition to AED 0.02 in offering costs.


The IPO is the largest offering in UAE history and will be open to both UAE and non-UAE nationals, including both individual and institutional investors. The ten-day IPO will close on March 27, 2007. SHUAA Capital is the Lead Manager, Financial Advisor and Bookrunner for the IPO.


The low-cost carrier has also announced that Abraaj Capital has demonstrated its support for Air Arabia’s upcoming IPO by acquiring a strategic minority stake through its newly launched Infrastructure and Growth Capital Fund.


Sheikh Abdullah Bin Mohammad Al Thani, Chairman, Air Arabia, said: “We are grateful to the Ministry of Economy for approving our IPO. Air Arabia’s strategic objective is to be one of the leading airline companies in the region. The IPO is happening at a very opportune time, when our business is developing rapidly and gaining in strength. We welcome everyone to be part of Air Arabia.”


Adel Ali, Chief Executive Officer, Air Arabia, said: “The IPO is a strategic tool to achieve our stated vision to be one of the world’s leading budget airlines in terms of profit margin, innovation, reputation and operational excellence. Air Arabia’s IPO is an opportunity for investors to be part of a growing company that is dynamic and has proven its mettle within a short span of time.”


The company intends to use the proceeds from the offering, in addition to bank financing, to expand the size of its existing fleet from nine to at least 34 aircraft by 2016. In addition, Air Arabia aims to expand its scope of operations and acquire additional spare engines.


Makram Kubeisy, Managing Director of SHUAA Capital’s Investment Banking Group, said: “We strongly believe that Air Arabia’s IPO will be extremely successful. It is the UAE’s largest IPO to date and the first to see an airline go public in the Middle East. The company has an impressive track record and financial performance.”

“Air Arabia has a strong and capable management team that has grown the business and offering considerably over the last few years. The fundamentals of the company, coupled with its future plans, indicate a very positive future for Air Arabia,” Kubeisy added.


Karim Schoeib, Senior Vice President of SHUAA Capital’s Investment Banking Group, said “Air Arabia is a unique company that has achieved tremendous growth and profitability as reflected by the increase in its income to AED749 million in 2006 compared to AED411 million in 2005, an increase of 82 per cent.  The company also posted a net profit of AED101 million last year, up 222 per cent compared to AED31.3 million in 2005. Air Arabia has transported over 3.3 million passengers at economical fares, while adhering at the same time to the highest standards of safety and comfort.”


Subscription to the offered shares will be through four tranches. Tranche (I) is a retail tranche with a size of 250,000,000 shares, and is open to UAE and non-UAE resident subscribers with minimum subscriptions of 10,000 shares and maximum of 50,000 shares. Additional subscriptions in tranche (I) will be in multiples of 5,000 shares and allocation will be done on a pro-rata basis, with a minimum allocation of 1,000 shares per subscriber.


Tranche (II) is designated for high net worth individuals and institutional investors, both UAE and non-UAE, with a size of 2,116,700,000 shares.  Subscriptions will start at 55,000 shares with any additional shares being multiples of 5,000 shares. Allocation will be done on a pro-rata basis.


Tranches (III) and (IV) are for 100,000,000 shares each, and they are slated respectively for current employees and retirees of the government of Sharjah, and management and employees of Air Arabia. Subscriptions in tranche (III) are for a minimum of 5,000 shares, while subscription in tranche (IV) will be for a minimum of 10,000 shares. All allocations will be done on a pro-rata basis, with a minimum guaranteed allocation of 5,000 shares for tranche (III) and 1,000 shares for tranche (IV).


The National Bank of Abu Dhabi has been appointed as the Lead Receiving Bank. In addition, investors will be able to subscribe at receiving banks both in the UAE and the GCC.


Receiving banks in the UAE are: National Bank of Abu Dhabi, Abu Dhabi Commercial Bank (ADCB), Mashreqbank, Dubai Bank, Dubai Islamic Bank, Emirates Bank, First Gulf Bank, InvestBank, National Bank of Fujairah, National Bank of Umm Al Quwain, Sharjah Islamic Bank and Union National Bank.


Receiving banks across the GCC are: Ahli United Bank, Bahrain; Ahli Bank, Qatar; and National Bank of Oman, Oman.


Allocation of shares among subscribers will take place on April 8, 2007, with refunds for subscribers in the UAE on April 11, 2007, and for those in the GCC on April 14, 2007.


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