AirAsia Group, which owns the eponymous Malaysian budget carrier, is planning to list its profitable logistics arm Teleport as early as the second half of next year, the unit’s chief told DealStreetAsia.
Ahead of the IPO, the company also plans to raise $50 million in a strategic round, Teleport CEO Pete Chareonwongsak said. Chareonwongsak added the company is in discussions with venture capital, growth equity, and strategic investors for the strategic round, which it had initially targeted for last year.
“We would love to close our strategic round as soon as possible, amid the positive sentiment created by the [COVID-19] vaccine distribution. The listing will be after the strategic round. We are evaluating our options [regarding the listing destination] as we are a regional company with operations in seven markets,” he said. “Our final goal remains to get listed within the next 18 months.”
Founded in 2018, Teleport has operations in Malaysia, Singapore, Thailand, the Philippines, Indonesia, China, and India. It provides air cargo, and door-to-door delivery, among other services. It also provides food delivery services in Malaysia and Singapore.
Teleport has the distinction of being the only unit in the AirAsia group — digital platform AirAsia.com, fintech arm BigPay Group, and other digital entities — that is profitable.
For the quarter ended Sep. 30, 2020, Teleport’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) stood at 20.12 million ringgit ($5 million), down from 62.12 million ringgit in the same period of 2019. It recorded a 54% decrease in revenue to 55.68 million ringgit in the three months, as it was hit by the pandemic-induced travel restrictions.
The main revenue driver for Teleport is its air cargo business. Since cargo is carried in the belly space of passenger aircraft, a dip in travel volumes in 2020 had a domino effect on air cargo transport as well, said Chareonwongsak while explaining the revenue fall.
“The environment has become tougher than before, no doubt. But it also offers more opportunities than before if we can adjust to the new environment, for example in instant delivery for food, flowers, and groceries,” he said.
Teleport has restarted cargo-only flights to Hong Kong, Incheon (South Korea), India, and other markets, from Malaysia and is pushing to increase these connections.
“We’re going strong on Kuala Lumpur to East Malaysia routes as well. In Thailand, we are now the biggest airline in the market, with regular connections to China, India, and beyond. In Indonesia, we managed to grow our tonnage significantly and have taken market share from our competitors,” said Chareonwongsak.
Struggling to stay airborne
Teleport’s move to raise funds and go public come as AirAsia, and most airlines globally, are raising capital to fly above the pandemic storm.
In the September quarter, AirAsia Group saw its net loss widen to 857.81 million ringgit ($211 million) from a net loss of 51.44 million ringgit ($12.66 million) a year ago, as the pandemic took a toll on travel.
Consequently, the budget airline has been planning private placements and other fundraising activities at AirAsia. It is planning to sell 32.67% of its stake in its Indian operations to the majority shareholder Tata Sons for $37.7 million, according to reports.
Last month, AirAsia announced that Hong Kong businessman Stanley Choi Chiu Fai had entered as a substantial shareholder in the carrier via his wholly-owned entity Positive Boom Ltd. He acquired 167.1 million AirAsia shares in the first tranche of a private placement, raising his shareholding in the group to 332.5 million shares, or an 8.96%.
Choi is the chairman of Head & Shoulders Financial Group, the chairman and executive director of Hong Kong-listed International Entertainment Corporation, and a co-founding member for YunFeng Capital — a private equity fund co-founded by Alibaba Group founder Jack Ma.
On Feb 24, AirAsia said in a regulatory filing that as a result of the bankruptcy proceedings of its associate company, AirAsia Japan, the group has recognised a loss of $74.11 million in the second half of 2020. The company also incurred expenses of $5.18 million in the fourth quarter of 2020 and the first quarter of 2021 on account of de-registration and moving of three aircraft from Japan to Malaysia.
The company has not released its earnings for Q4 2020.
Expanding AirAsia Food
Teleport is also looking at expanding its food delivery services in other cities in Thailand, Indonesia, and the Philippines in the second half of 2021, Chareonwongsak said.
“With airasia food expanding into its second city, Singapore, this marks the start of airasia food’s rapid expansion across all major cities in Southeast Asia,” he said.
He said setting up airasia food and airasia fresh, an online grocery marketplace, in these markets is made easier as Teleport has already expanded its delivery infrastructure in many of these cities since November 2020.
“What is unique with how we are scaling is that we need a lot less capital to grow compared with other competitors,” he said. “One of the things that make us stand out is our 0% commission model,” he said.
The service will compete with more established food delivery players such as Grab Food and Food Panda.