At the closed part of the government meeting on Friday, August 30, an agreement was reached according to which, after the initial public offering (IPO) of shares in the Latvian national airline airBaltic, the state must retain at least 25% plus one share in the company's capital, Transport Minister Kaspars Briškens told journalists after the government meeting, the news portal RUS.TVNET reports. /nginx/o/2024/07/18/16229008t1h7d90.jpg)
airBaltic plane. Photo: Toms Kalnins
At the closed part of the government meeting on Friday, August 30, an agreement was reached according to which, after the initial public offering (IPO) of shares in the Latvian national airline airBaltic, the state must retain at least 25% plus one share in the company's capital, Transport Minister Kaspars Briškens told journalists after the government meeting, the news portal RUS.TVNET reports.
The minister explained that the negotiations with airBaltic's strategic investor are currently not about selling a controlling stake, but about acquiring a minority stake before or during the IPO, and possibly also joint participation in the IPO. "The state's condition, agreed upon by the government on Friday, is that after the IPO the state must retain at least 25% plus one share, which is a blocking minority stake," Briškens said.
When asked whether this meant that after the IPO process Latvia was ready to give up its controlling stake in airBaltic, he answered in the affirmative.
"If in this way we can ensure both the arrival of a strategic investor and the attraction of sufficiently large capital for the IPO, then today's decision provides for this. If the company is able to attract sufficient capital during the IPO to implement its existing business plan with the simultaneous attraction of a strategic investor and without state investment in the IPO, then the state is ready to support the preservation of participation in the amount of a blocking minority stake," the minister added.
airBaltic Supervisory Board Chairman Klavs Vasks said that the government on Friday supported airBaltic's plan to continue advancing the airline's IPO with all the preparatory work, including airBaltic continuing negotiations with a strategic investor as a prerequisite for the IPO.
"There are currently no comments on direct distribution of shares, as in each investment process there is a bidding process to assess the company's valuation – an indicator of how large the amount of investment is in exchange for shares of the company's stock. Negotiations are ongoing, as the company is trying to achieve maximum benefit for the state," Vasks said.
He also reported that decisions had been made on airBaltic's further actions to ensure the success of the IPO: consolidation of share capital and relevant decisions to be submitted to the Register of Enterprises. A conceptual decision had also been made that the company would not require any additional investments from the state and that scenarios under which the state could make any investments during the IPO process were not being considered. "Of course, various development scenarios are not excluded," Vasks added.
At the same time, Vasks noted that attracting an investor is an ongoing process, but it is impossible to conduct an IPO without attracting a strategic investor.
He did not provide more detailed comments on the identity of the investor, noting that the negotiation process is ongoing. "The plan to test the IPO market implies the beginning of the fourth quarter of this year. This means that the time to reach an agreement with the investor is the next couple of months," he noted.
Who will purchase the shares?
As reported, prior to the possible IPO, a certain strategic investor, whose name has not yet been disclosed, expressed interest in airBaltic shares.
According to Briškens, this is good news, as the investor could enter the capital of airBaltic with a minority stake, and then together they could prepare for an IPO.
airBaltic CEO Martin Gauss noted in mid-August that pre-IPO negotiations with a potential investor were ongoing, with the possibility of the process taking place in the second half of this year. The airline's representatives did not provide more detailed information about the strategic investor, noting that negotiations were ongoing.
The Latvian state owns 97.97% of airBaltic shares, and the financial investor Aircraft Leasing 1 owns 2.03%.
