(Reuters) – African budget airline Fastjet Plc said it raised gross proceeds of about 50 million pounds ($75 million) through a share issue to fund its expansion and acquire aircraft.
The London-listed company’s shares slumped nearly 13 percent on Wednesday to 1 pence, the price at which each of the 5 billion new shares were placed.
The funds from the offering, which represents about 75 percent of Fastjet’s enlarged share capital, will help the company add new international routes and expand in Kenya, South Africa, Uganda, Zambia and Zimbabwe, it said.
The company, which aspires to be the first pan-African low-cost carrier, also intends to use excess funds to start a programme to acquire used Airbus A319 aircraft.
EasyGroup, the investment vehicle of Haji-Ioannou, bought stock worth 5 million pounds, or 10 percent of the new shares, Fastjet’s chief executive, Ed Winter, told Reuters.
Haji-Ioannou, commonly known as Stelios, founded low-cost carrier easyJet Plc in 1995 and started Fastjet in 2012 along with Winter, who was easyJet’s chief operating officer.
Stelios had a stake of 10.8 percent in Fastjet before Wednesday’s fundraising, which was first reported by The Times.
A spokesman for Stelios, contacted before the results of the placing were announced, declined to comment.
The fundraising also brought on board first time investors in Fastjet. The were Prudential’s M&G, UK equity fund manager Hexam Capital Partners LLP, investment manager J O Hambro Capital Management Ltd and South African investment group Old Mutual.
Fastjet also announced a proposed share consolidation to reduce its share price volatility. No further details were given.
The company, which started flying in Tanzania in November 2012, said its plans to expand in Africa would give it up to 210 million potential customers, or a fifth of the continent’s population.
To service that population, Fastjet would have to boost its aircraft fleet from the three it currently has to 34 strong by 2018, Winter said.
By then, Fastjet intends to have leased a third of its fleet and have used equal amounts of debt and equity to finance the rest of the fleet.