We are pleased to report that STJ advised Indigo Partners on its placement of shares in Wizz Air Holdings Plc (“Wizz Air”), the largest low-cost carrier in Central and Eastern Europe by market share, via an accelerated bookbuilt offering. This transaction is the largest UK ABB and the largest European airline ECM transaction since June 2013.
The transaction raised gross proceeds of £500m via the sale of c.12.5 million ordinary shares, representing 17.07% of the company’s ordinary share capital and 67 days’ trading volume. The Wizz Air share placement was successfully completed against a background of very significantly elevated market volatility and an extremely challenging environment for the global airline industry due to the outbreak of Coronavirus, although with the share price close to its all-time high (in both sterling and dollar value).
This is Indigo Partners’ second sell-down of Wizz Air shares since June 2017, which was also advised by STJ. Indigo will continue to own ordinary shares as well as Convertible Shares and Convertible Notes linked to ordinary shares of Wizz Air, which in total represent 44.8% of the fully diluted share capital post the offering.
STJ has had a consistent advisory dialogue with Indigo in relation to its Wizz Air holding since 2015. Following a period of strong share price performance and well received Q3 ’20 results, STJ advised Indigo on this sell-down transaction via a best-efforts accelerated bookbuilt offering after careful consideration of the various options available including a de-risked backstop transaction. Following a coordinated process, a syndicate of 4 bookrunners was appointed, including 3 banks that worked on the previous placement, to optimise the investor demand and pricing outcome.
The placing followed a limited wall-crossing exercise given a previous process to establish a visible shadow book of demand. The offering launched with a “soft covered” message from a range of existing and new Wizz Air shareholders and was oversubscribed within 40 minutes of launch.
Investors were informed at launch that EEA investors would be prioritised in allocations; a restriction further exacerbated by the transitional status of UK investors post-Brexit. Despite this, the final book of demand was 3.9x oversubscribed at the placing price including very substantial volume from the highest quality long-only investors and strong support from hedge funds. The strength of the book allowed Indigo to allocate the significant majority of the placing to high quality EEA (including UK) investors, helping to improve Wizz Air’s current level of EEA qualifying ownership.
The final placement price of £40.15 represents a tight discount of 3.5% to the market closing price, compared with the average 5.1% discount of European ABBs completed YTD. Out of 3 large European ABBs raising c. €3.7bn of equity and pricing on the same evening, the Wizz Air placement achieved the tightest discount, the largest percentage of company sold (17.1%) and the largest number of trading day (67 days) based on ADTV. The transaction also achieved the tightest discount in a UK secondary ABB representing more than 30 days trading volume since May 2017.
Wizz Air shares traded very well in the aftermarket, closing up 5% relative to the placement price.
STJ advised Indigo on all aspects of the placing including selection and appointment of the bank syndicate, structuring, legal documentation, timing, investor targeting and classification and shadow book development, bookbuilding strategy, marketing range setting and messaging during the bookbuild, pricing and allocations.