Tuesday February 19, 2013
Tune Ins set to attract investors for its IPO
PETALING JAYA: Tune Ins Holdings Bhd, which is set to be listed on the Main Market of Bursa Malaysia tomorrow, is expected to attract a fair share of potential investors looking to tap the company’s business potential and association with low-cost carrier, AirAsia.
Tune Ins fixed its final institutional and retail price of RM1.35 per share following the completion of its bookbuilding exercise. The price is based on 14 times financial year 2013 price/earnings, which is a 20% premium to the industry average in view of its steady earnings from its tie-up with AirAsia Bhd.
Some observers have argued that this might be overpriced, but this has not done anything to deter investor interest.
Based on reports, its initial public offering of 37.59 million shares to the public has been oversubscribed by 2.07 times. A total of 8,366 applications for 115,45 million shares were received from the public for the 37.59 million shares.
Tune Ins is a regional insurance product manager for its online partners AirAsia, Tune Hotels and AirAsia Expedia, with its products sold to the customers as part of their online booking process. It also has a general insurance business available only in Malaysia currently.
According to reports, the company is banking on its online business to spur growth.
Analysts too seem optimistic about the company’s online business, as some feel that rapid growth of digital technology, as well as the nominal cost in terms of infrastructure and low claims rates would further spur its growth. Industry observers also reckon that competition in this area will grow in the near term.
In an interview with StarBiz recently, Tune Ins chief executive officer Peter Miller said that besides digital technology, the removal of the tariff structure in the motor and fire insurance segment would further spur the growth of online insurance.
Tune Ins is a company under the Tune Group stable. The group is co-owned by AirAsia Group chief executive officer Tan Sri Tony Fernandes and his partner Datuk Kamaruddin Meranun, who are also the founders of AirAsia.
Industry observers believe that Tune Ins can also leverage on AirAsia customer base.
According to a report by JF Apex Research earlier this month, Tune Ins currently depends on AirAsia for a substantial portion of its online insurance business and the travel protection plan contributed about 70% to 80% to the insurer’s revenue.