Rubicon, the investment vehicle that started life as a software company, paid $85.7m (£55m) to take over Fly540 from Lonrho, the London-listed African conglomerate that spent six years establishing the airline in Kenya, Tanzania, Ghana and Angola.
The firm hopes to start operations under the FastJet brand name and orange livery within three to four months of the deal being approved by investors, said chief executive designate Ed Winter.
“Having Fly540 massively de-risks our launch,” Winter, a former easyJet executive and founder of no-frills carrier Go, told City A.M. “It’s a small airline, with 10 planes, but the potential for expansion is enormous.
“It’s the optimum time to develop low cost air travel in Africa…. It’s the last frontier for airlines. Wealth is being spread across much greater sections of society, but the road and rail links remain difficult.”
He stressed that FastJet will operate to European standards, in the wake of a fatal crash in Nigeria prompting safety concerns in the industry.
Under yesterday’s deal, Stelios takes a five per cent stake in Rubicon with an option for a further 10 per cent, while Lonrho remains involved with a 73.7 per cent holding in the firm.
Stelios will take a non-executive seat on the Rubicon board, and has granted the firm a ten-year licence to use the FastJet name.
“Past experience shows by halving fares, a successful low-cost carrier can encourage those people, who have never previously travelled by air, to fly,” said Stelios yesterday.
Rubicon’s Richard Blakesley, who will remain a director at the enlarged firm, said the purchase of Fly540 fits his investment firm’s requirements for “an exciting deal with real growth opportunities”, adding that he looked forward to “an extremely challenging and rewarding time, and learning more about the industry”.
EASY DOES IT
Stelios started out working in his family’s shipping business in Greece
He founded easyJet in 1995, and his family remains a major shareholder
His car hire firm easyCar is set to launch a car-sharing scheme in London this year
There are also two easyGyms, based in Wood Green and Slough
Other projects include DVD rental, airport bus transfers, pizza delivery and office space
There are 17 franchised easyHotels, with a new one opening soon in the City
ADVISERS RUBICON’S PURCHASE OF FLY540 FROM LONRHO
RUBICON worked with WH Ireland, its adviser since floating on Aim in 2006, during the acquisition of Fly540. Head of corporate finance James Joyce led the team alongside Nick Field.
Joyce, a chartered accountant, is an expert in the sector and counts Australian carrier Skywest among his clients, as well as aircraft leasing companies Aviation PLC and Capital Lease Aviation.
He previously worked at Arthur Andersen and the London Stock Exchange, and prior to joining WH Ireland spent five years at a venture capital and corporate advisory firm.
Lonrho was advised by new broker and adviser Jefferies Hoare Govett, which is replacing Panmure Gordon.
Managing director Sara Hale is the firm’s lead corporate broker, while Michael Collinson in the consumer investment banking team is the lead sector banker.
Hale is also on the team that picked up the broking mandate at potash firm Sirius Minerals in April, and has advised Hargreaves Services, Avis and Taylor Wimpey in recent transactions.
Collinson, who moved to Jefferies from RBS last year, runs the consumer industries group of global banking and markets with Robert Foster.