Virgin Australia targets $572 million IPO in Asia’s biggest airline listing for a decade
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Bain bought Virgin Australia in 2020 after it collapsed at the start of the Covid-19 pandemic and has been planning for the IPO for at least two years.
PHOTO: BLOOMBERG
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SYDNEY - Bain Capital-controlled airline Virgin Australia will relist in a A$685 million (S$572 million) initial public offering (IPO), betting that investors are brushing off the turmoil caused by US President Donald Trump’s trade war.
The US private equity firm is selling 30 per cent of Virgin Australia at A$2.90 a share, it said on June 4, which will give the airline a market value of about A$2.3 billion, according to the terms of the sale.
The IPO is set to be the largest by an airline in Asia for a decade, data compiled by Bloomberg shows. Virgin Australia shares are due to start trading in Sydney on June 24.
Billions of dollars’ worth of acquisitions and IPOs worldwide were put on hold globally as Mr Trump’s trade war ripped through markets. But Australia’s benchmark S&P/ASX 200 index has surged about 15 per cent from an April low, opening a window for Bain to push through Virgin Australia’s long-awaited return to the exchange. Qantas Airways stock is at a record high.
The price equates to about seven times the airline’s forecast earnings for the year ending June 2025, a discount to local giant Qantas, which trades at around 10 times expected earnings for the same period.
The difference in price reflects Virgin Australia’s position as a smaller, less diversified airline with a less influential loyalty business.
Bain bought Virgin Australia in 2020 after it collapsed at the start of the Covid-19 pandemic and has been planning for the IPO for at least two years, according to filings from the airline. After the float, Bain will own around 40 per cent of the carrier, while Qatar Airways has a 25 per cent stake.
Virgin Australia’s first run as a publicly traded entity did not go well. Even before the carrier’s 2020 demise, most of the stock was locked up by a handful of airlines that were largely inert investors and unwilling to tip in additional funding to keep it going through the pandemic. Relatively few shares changed hands each day, and the stock rarely traded above its IPO price. BLOOMBERG
