IFC, IFC Emerging Asia Fund and Indigo Partners Support Low Cost Carrier Cebu Pacific in Covid-19 Takeover | Press releases | Asia
The Philippines’ leading airline, Cebu Air Inc. (Cebu Pacific, PSE: CEB), has taken another important step to secure its future as a leading low-cost provider of domestic and international travel after raising new funding from of the International Finance Corporation (IFC), the IFC Emerging Asia Fund and Indigo Philippines LLC, a subsidiary of Indigo Partners LLC.
IFC, the IFC Emerging Asia Fund, a private equity fund managed by the IFC Asset Management Company and Indigo Partners, a private equity firm specializing in global air transport investments, have invested US $ 250 million in CEB in the form of convertible bonds.
This investment will provide the CEB with a longer liquidity trail to help the company withstand the effects of the pandemic until economic activity and travel demand recover. It will also help maintain the trade and competitiveness necessary to provide affordable transport in an island country where maritime transport alone cannot meet the connectivity needs of people, goods and services.
“We see Indigo, IFC, and IFC Emerging Asia Fund not only as capital providers, but also as long-term partners to drive business improvements, as well as accelerate our sustainability agenda, ”said Lance Gokongwei, President and CEO by CEB. “This will further strengthen the CEB as we recover, so that we can continue to fulfill our commitment to improving the lives of people in the communities we serve for a long time.
As an archipelago of over 7,600 islands and a major tourist destination, the Philippines is heavily dependent on air travel. Tourism generated 12.7% of the country’s gross domestic product in 2019, while remittances, which depend on the movement of Filipino workers abroad, generated an additional 8.9%. As the Philippines’ largest domestic airline and one of its major international carriers, the CEB will play a critical role in the country’s recovery from Covid-19.
Air transport is a major contributor to the global economy. Air transport supported 87.7 million jobs globally before the pandemic, including 11.3 million direct jobs and 44.8 million tourism-related jobs, according to a report by the Air Transport Action Group. It contributed $ 3.5 trillion to the global economy in 2018, while air freight carries 35% of global trade by value. However, Covid-19 has had a devastating impact on the industry, resulting in stranded fleets, significant financial losses and loss of customer confidence. This makes long term and experienced partners essential in helping airlines get back on track.
“We are delighted to partner with CEB, a leading carrier in the market and one of the most successful airlines in the region,” said Jean-Marc Arbogast, Country Manager for the Philippines at IFC. “Maintaining low cost travel services is essential in an island nation like the Philippines, and airlines will play a critical role in the country’s economic recovery. The CEB will play a leading role in this recovery, providing connectivity and jobs, avoiding disruptions in supply chains and supporting the tourism sector when it is needed most. “
“Indigo is delighted to invest in CEB and to work with its team to take advantage of the many growth opportunities to come as travel demand increases following the pandemic,” said Bill Franke, Managing Partner of Indigo Partners. “We have great respect for what the Gokongwei family has accomplished with the airline, and we look forward to a strong partnership.”
IFC has been an active investor in private sector airlines in emerging markets around the world, with 19 investments since 2000. Projects with low cost carriers include supporting the expansion of GOL Airlines in Brazil and assisting at the launch of Volaris in Mexico.
Indigo Partners specializes in investing in the aviation sector. Its current airline investments include Frontier Airlines in the United States, Volaris in Mexico, Wizz Air in Europe and JetSMART in Chile.
About Cebu Air, Inc. (Cebu Pacific, PSE: CEB)
CEB entered the Philippine aviation industry 25 years ago and is now the largest airline in the country with its “low price, high value” strategy. It offers the largest network in the Philippines, with flights covering Asia and the Middle East. One of the youngest fleets in the world, its fleet of 74 aircraft consists of Airbus and ATR aircraft, which includes its two ATR freighters and one A330 cargo aircraft. For more information visit www.cebupacificair.com.
IFC—A member of the World Bank Group — is the world’s largest private sector-focused development institution in emerging markets. We work in over 100 countries, using our capital, expertise and influence to create markets and opportunities in developing countries. In FY2020, we invested $ 22 billion in private businesses and financial institutions in developing countries, harnessing the power of the private sector to end extreme poverty and boost shared prosperity. For more information visit www.ifc.org.
About IFC Asset management company
IFC Asset Management Company (AMC), a division of IFC, mobilizes and manages capital to invest in companies in developing and border markets. Created in 2009, AMC offers major institutional investors unique access to IFCThe investment pipeline and expertise in investing in emerging markets, while offering a positive impact on the development of the countries in which it invests. Investors in funds managed by AMC include sovereign wealth funds, pension funds and development finance institutions. He has raised over $ 10 billion in 13 investment funds spanning equity, debt and fund of funds products. For more information visit www.ifcamc.org
About IFC Emerging Asia Fund
The $ 693 million IFC Emerging Asia Fund, launched in 2016, makes equity and equity-like investments in all sectors of emerging markets in Asia. For more information visit www.ifcamc.org/funds/ifc-merging-asia-fund
About Indigo Partners
Indigo Partners is a private equity firm established by WA Franke in 2003 to pursue strategic acquisitions and investments in air transportation and related industries. The company was a senior investor in Singapore-based Tiger Airways and Ft. Lauderdale, Florida-based Spirit Airlines, and maintains leading investments in Wizz Air Holdings, Plc, a ULCC with multiple bases in Central and Eastern Europe; Frontier Airlines, a Denver-based ULCC; Volaris Airlines, a Mexico City-based ULCC; and JetSMART, a Chile-based ULCC. Indigo is headquartered in Phoenix, Arizona.
Michelle Rose F. Lim
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