Virgin Australia (VA, Brisbane International) is eyeing a November 2023 stock market initial public offering (IPO) according to a Reuters report. That outlet, citing a "source with direct knowledge of the matter," says the listing aims to raise AUD1 billion Australian dollars (USD660 million).
The timing aligns with Australian financial reporting requirements and the end of the local financial year on June 30. Given it will take around two months to compile and audit the FY22/23 accounts, the airline can take fresh financial accounts to investors over the September/October period. Those accounts will show the highest profits margins in 15 years and a profit running into the hundreds of millions of dollars.
US-based private equity firm Bain Capital acquired a 93% stake in Virgin Australia in 2020 after the airline filed for voluntary administration earlier that year. The airline consequently delisted from the Australian Stock Exchange (ASX). Bain picked up Australia's second biggest passenger airline for AUD3.5 billion (USD2.31 billion), including AUD731 million (USD482.6 million) in cash. As reported in ch-aviation earlier this month, Bain Capital and the minority investors will receive a capital return ahead of the relisting almost equal to their initial investments.
The IPO/relisting is expected to value Virgin Australia in the AUD2.5 billion (USD1.65 billion) to AUD3 billion (USD1.98 billion) range, and Bain is widely tipped to be retaining around 60% - 65% of its stake. The IPO will generate a financial bonanza for the private equity firm, which having recouped its initial investment via the capital return, will see substantial additional capital coming in as it sells down its shareholding, all the while still retaining a majority stake in the airline.
Ahead of the IPO, and looking on from the sidelines, are Virgin Australia's pre-administration era shareholders, Etihad Airways (EY, Abu Dhabi International), the Nanshan Group, Singapore Airlines (SQ, Singapore Changi), HNA Group, and the Virgin Group. Collectively, these entities lost billions when their investments evaporated after Virgin Australia went into administration and was subsequently sold to Bain.
