The airline, a unit of conglomerate JG Summit Holdings Corp. and the second biggest Asian budget carrier by market value, raised $611 million in its IPO including a greenshoe option, making it a record amount in dollar terms for a Philippine listing.
Cebu Air's debut takes place amid a boom in IPOs in Asia as well as strong foreign demand for high-yielding emerging markets such as the Philippines.
The Philippine stock market hit a record high on Tuesday. Upbeat sentiment following presidential elections in May have helped lift the index about 40% this year and it is the second best performer in Southeast Asia after Indonesia.
This backdrop bodes well for upcoming listings in the Philippines, analysts said. Philippine miner Nickel Asia plans to raise $162 million in an IPO next month.
"Having launched successfully, the ones apprehensive on the sidelines are now emboldened to come in," said Alejandro Yu, president of R.S. Lim and Company, a local stock brokerage.
Cebu Air's shares opened at P132 after a ceremony that included flight attendants dancing the flight safety routine to a Lady Gaga pop song on the stock exchange trading floor, peppered with tube balloons carrying the airline's yellow orange colours.
The safety routine dance was a big hit on You Tube earlier this month.
The stock rose as high as P133.5, before closing at P133. The airline had sold about 215 million shares at its IPO at P125 each, Cebu Air's parent said late on Monday.
At Tuesday's close, Cebu Pacific was valued at nearly P97 billion or $2.2 billion, larger than rival Tiger Airways at about $723 million but smaller than Malaysia's AirAsia, valued at about $2.3 billion.
Growth eyed
Cebu Air CEO and President Lance Gokongwei said he expects the company's international business to overtake its domestic operations in four to five years as it seeks to increase its international capacity by 25% yearly via new foreign routes and flight frequencies.
"A natural progression in market share dictates that we will grow faster internationally than domestically," Gokongwei said, adding local operations now account for 62% of revenue.
"Revenue growth would be above 20% in the next 4 to 5 years, and hopefully our objective is to retain our margins," he said.
Cebu Air plans to use its share of the proceeds to buy more aircraft from Airbus to better compete with rivals regionally and Philippine flag carrier Philippine Airlines. It expects delivery of three more aircraft this year and 5 next year.
The airline flew the most number of passengers domestically in the first half, topping Philippine Airlines, and also flies 16 Asian routes.
Yu said the Cebu Air IPO was a big boost in confidence for the Philippine market and the company's plans to increase its flight frequency would attract business travelers, adding to its present client base comprising mostly of tourists.
Based on its IPO price, Cebu Air will trade at just over 10 times estimated December 2011 earnings, in line with Air Asia, which trades on a PE of 9.1 times 2011 earnings. Tiger Airways trades at 16.1 times forecast March 2011 earnings.
The IPO takes place against a backdrop of a flurry of new listings in Asian markets. Singapore wealth fund's GIC logistics unit GLP started trading last week and AIA, the Asian life insurance arm of AIG makes its debut later this week in what looks set to be the world's third biggest IPO.
Citigroup, Deutsche Bank and JP Morgan are joint global lead managers for the share sale, and ATR KimEng Capital Partners is the local lead underwriter.
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