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Bain Capital has set 24 June as the date for Virgin Australia’s long-awaited return to the ASX.
The private equity firm is looking to raise $685 million in an initial public offering (IPO), which will reduce its holding in the airline to 40 per cent, as reported in The Australian Financial Review. Brokers are selling 30 per cent of stock to new investors, with Qatar Airways to retain 23 per cent and management 7.8 per cent.
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According to the Financial Review’s “Street Talk” column, Virgin will relist with a $2.3 billion market capitalisation and $3.6 billion enterprise valuation at $2.90 a share, a 30 per cent discount to rival Qantas’ valuation. In total, 236.2 million shares will go on the market, with bids due by Thursday afternoon.
Bain will also not sell any of its shares until after Virgin releases its half-yearly results in December; should the share price meet certain targets, it will be allowed to sell about 10 per cent of the group.
The news follows the March appointment of former chief commercial officer Dave Emerson as Virgin’s chief executive after the exit of Jayne Hrdlicka, as well as the approval earlier this year by the Australian government’s Foreign Investment Review Board of Qatar Airways’ purchase of 25 per cent of the company.
The refloating of Virgin has been mooted for several years following its delisting after it went into administration in 2020 during the COVID-19 pandemic. It was subsequently bought by Bain, which has spent the past five years returning the company to profitable operations.
Virgin’s shareholders – including Bain, the Virgin Group, and Queensland Investment Corp – in 2023 each took a share of a $730 million capital return proportionate to their stakes in the airline, or 93 per cent, 5 per cent and 2 per cent, respectively.
Virgin employees will also receive $3,000 in share rights as part of the listing, dubbed a “Take-Off Grant” for staff. In an internal email, Emerson said eligible employees would receive their share rights at the time of the IPO.
“These rights would convert to ordinary shares after a 24-month vesting period, provided you remain employed with the group,” he said.
“Once vested, the shares would be yours to keep or sell as you choose. No upfront payment would be required from you to receive these shares.”
Bain Capital has been contacted for comment.
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says:Well at last we have a date!! Interesting though with 30% of shares listed for “new” investors this means that just maybe we don’t have a major investor waiting in the wings and in today’s market the small investor may not have the available investment funds on hand especially when the returns from other more weathered enterprises are more appealing. Twelve months of trading under the new regime will give a better investment consideration and opinion.