On Tuesday, Wizz Air’s largest investor, American equity firm Indigo Partners, announced that it had once more sold a large part of its shares in the low-cost carrier. The placing, facilitated by Barclays Bank, involves 7.69 million shares. This brings the company’s stake in the budget airline down to just under 9%.
Shares of Hungarian low-cost carrier Wizz Air dropped by 6.5% today as Indigo Partners announced it had sold £400 million ($555.5 million) worth of stock. This takes the private equity firm’s ownership down from 17.5% to a mere 8.5%. The airline will not receive any proceeds from the sale.
Long-standing relationship
American Indigo Partners has got its fingers in many budget-carrier pies. It owns a controlling interest in Frontier Airlines and Chilean JetSmart. The company also has a stake in Mexican LCC Volaris.
It has been an investor of Wizz since 2004 and previously owned as much as 20.6%. However, it sold shares worth £500 million ($650 million) at the beginning of February this year, in addition to 10 million shares back in 2017. The equity firm’s founder and managing partner, William A. Franke, is also the Chairman of Wizz Air.
The deal involved the sale of 7.69 million shares via what is known as an ‘accelerated bookbuild process’ This is a method that entails the offering of the shares onto the capital market in a very short period of time. The bank facilitating the placing, Barclays, said that it would be completed on Thursday, March 18th.
Wizz is not doing too bad, all things considered
Meanwhile, the drop in share price should be measured against the fact that prior to the announcement, Wizz shares rose by 13% over the past three months. The airline has coped with the crisis better than most.
Not only has it kept on taking deliveries, but it has launched 260 new routes and opened no less than 13 new bases. These include London Gatwick, Milan Malpensa, Oslo, and Abu Dhabi. The airline ended December 2020 with a cash balance of €1.2 billion ($1.43 billion).
Indigo Partners and Airbus
Just less than a week ago, all-Airbus carrier Wizz welcomed its very first A321neo to the fleet. The aircraft will be stationed at London Luton and will be joined by two more of the type in May. Wizz will base another of the newcomers further to the south at London Gatwick.
The aircraft are part of a package deal that Indigo Partners made for its airlines at the Dubai Air Show in 2017. The firm then signed a Memorandum of Understanding with Airbus for an additional 430 aircraft to be shared between its carriers. Wizz was to take 72 A320neos and 74 A321neos.
The deal was valued at $49.5 billion at list price, and as late as June 2020, Mr Franke stated that he was still comfortable with the order. In 2019 Indigo Partners signed another MoU for 50 A321XLRs, 20 of which will go to Wizz.
Wizz Air was not immediately available for comment.