April 20, 2024

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[THE INVESTOR] Korean budget carrier T’way Air has lowered its initial public offering price after failing to impress investors, according to industry sources on July 25.

“Even though investor demand was lower than expected, we still plan to go public on Aug. 1,” a T’way Air spokesperson told The Investor.

According to sources, the IPO price was decided at 12,000 won (US$10.66) per share, much lower than its the price band of 14,600 won to 16,700 won. A total of 430 institutional investors participated in the demand forecast.

Industry sources say the low demand was mainly due to the current overall economic situation in Korea. Recently, local stocks have slipped as investors fretted over the intensifying trade tensions between the United States and China. Moreover, some unstable earnings performance by the top Airline operators here, including Asiana Air and Korean Air, also lowered T’way Air’s prospects among investors, sources said.

Market estimates regarding the valuation of T’way Air were also adjusted to around 700 billion won, much lower than the originally projected amount of 800 billion won to 1 trillion won.

In June last year, T’way CEO Jung Hong-geun announced that the company aims to debut on the country’s main bourse KOSPI to secure fresh funding for purchasing an additional eight Boeing 737 MAX8s by 2020 to expand to new routes.

By Song Seung-hyun (ssh@heraldcorp.com)