Why AirAsia needs to launch IPO spree?

What is Initial Public Offerings (IPO)

IPO stands for initial public offering and occurs when a company first sells its shares to the public.

An IPO or Initial Public Offering occurs when a private company such as AirAsia offers up shares of its company for sale to the public, who by purchasing those shares own a piece of the company. Small private companies with yearly revenue of less than RM4 billion carry out IPOs to raise capital for growth and expansion, while well-established private companies have IPOs to become publicly traded and even bigger. For example when Rupert Murdoch’s News Corporation went public, it sold about a 19% stake of the company to raise almost $3 billion.

This really means AirAsia intends to raise at least billions of ringgit to settle its soft loan taken from CIMB. Rumour also has it AirAsia is given time to improve its Flight Operatives and safety performance by Department of Civil Aviation Malaysia till March 2013!!!

Can it be so coincidence or perhaps Tony Fernandez needs a huge instant capital to settle his on going huge court cases???

The rich knight – Sir Richard Branson has already dumped 10% of AirAsia shares – the only reason he knows to himself why he left AirAsia and a while later – Tony Fucker came out with ideas to launch IPO spree for AirAsia!

We knew something is boiling with the hush-hush plans by Tony Fernandez. We also heard a movie is ongoing – “A sugar and a trump” for telling another lies to the public about the already damaged reputation of Tony Fernandez.

Ah…..we don’t believe DCA would have suspended AirAsia even though its flight operatives is not updated or has improved; but we do believe DCA can be easily bought with a certain percentage of shares and some goodies that comes with privileges from AirAsia. Nah…fooling the public DCA is the hero???

Everyone know they were the cause to all the problems where being the safety guardian that’s condoning AirAsia’s current safety standards particularly ignoring the fact on its Pilot and cabin crew have been exhausted without proper regulation because of DCA’s good jobs. Check up our next post about how Lipas man was asked to meet with Director General of DCA at this time by Tony Fernandez – it’s only the showtime!!! They’re all belong to the same gang of AirAsia – tried playing opera games in the eyes of the public!!!

It’s an obvious strategy for AirAsia X to compete with Malindo Air.

Those investors who buy a company’s shares would also buy a piece of ownership in the company for a chance to benefit from its future profits. For the owners of a company, it means giving up some control depending on what percentage of the company is sold, opening the company up to public and government scrutiny, and being accountable to shareholders.

Yee hah….this is how AirAsia can be collapsed very easily!!! What goes around is now coming around for Tony Fernandez.

Pre-Announcement

When AirAsia decides to offer an IPO, it hires an underwriting company or companies which are usually investment banks that take on the task of researching the company about to go public, marketing the company and ultimately issuing and selling stock. In this event, AirAsia has CIMB as its underwriting company.

Once the underwriters have completed their research they take the company they are about to sell on a road show of presentations and sales spins to convince institutional investors and analysts to buy into the IPO. These large investors and not individuals are the ones who will do most of the buying and raise the company the most money. It is therefore no accident that average Joes are not invited to participate in an IPO before the first day of trading.

Public Sale

After all the hype and publicity, AirAsia will choose a date for the IPO offering which also means the public will be buying higher than that average Joes. The shares are usually offered to institutional investors and big buyers through an auction process.

After this, trading takes place for the first time on the open stock market at a starting price decided as the issue price. Depending on how well the first day of trading goes the company is able to meet its initial projections of how much capital it is expected to raise. According to CIMB; AirAsia would start RM3.51 even though its actual par value is only RM0.351 cents or based on it’s current share prices below RM3.10

Not all experts agree that investing in IPOs for individual investors is such a good idea. One reason is because individuals are encouraged to hold onto their stock for at least a month before selling, unlike institutional investors who can buy and sell whenever they want. Because of the hype surrounding an IPO, the stock price usually rises heavily in the first few days of trading and then tapers off or even falls. At the initial stage, the institutional investors can move in and out and make a killing.

Unfortunately for AirAsia’s cases; the buyers are expected to only “can” sell its shares after one year of holding if lucky and if unlucky; the buyers would need to hold it longer and may suffer after Malindo Air takes over AirAsia.

For the individual investor, especially one interested in investing for the long term, the best time to buy is not necessarily at the IPO stage but when the excitement has waned off and the price has fallen. A month or two later will be just as fine. Of course there are rare exceptions.

You can find more information about IPOs, particularly why investors have difficulty getting shares in an IPO, the pricing differences between the IPO and secondary market trading, abrokerage firm’s IPO eligibility requirements, IPO’s, and Lockup Agreements.

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We’re currently monitoring Ahmad Jauhari’s next move to terminate 5000 MAS workers not sparing any of its world renowned best cabin crew and best engineering workers. We won’t be surprise if MAS Pilot would not be spared in this killings too!!! Is MAS Unions and Associations still in sleeping mode?