Arik Air To Float $1bn IPO

Nigeria’s largest airline Arik Air plans to raise as much as $1 billion through a private share placement next year and then a possible initial public offering (IPO) in Lagos and London, Chris Ndulue, its managing director said. 

The airline wants to expand internationally both to bring in more hard currency, as well as to cushion the impact of the economic slowdown at home, and wants new investors to help it grow rather than using internally generated cash or debt.

“What we plan to do is first a private placement which will bring in a few new shareholders, then one year or 18 months down the line we can do an initial public offer,” Ndulue told Reuters in an interview.

He said Arik Air, which was founded a decade ago and is now West Africa’s biggest carrier by passenger numbers, had appointed advisers for the share placement and potential IPO in Lagos, with a secondary listing in London.

“We are looking at something in the neighbourhood of $1 billion for both private placement and IPO,” Ndulue said late on Wednesday.

“The biggest problem now is the foreign exchange issues. A lot of things are imported, a lot of services are imported we depend so much on foreign exchange which means that our costs have increased, in some cases more than doubled,” he said.

Emirates and Kenya Airways have announced plans to suspend flights to the Nigerian capital Abuja by next month due to falling demand as a currency crisis in Africa’s top economy deepens.

United and Iberia both stopped services to Nigeria earlier this year.

REUTERS