Chinese firms emerge with 40pc stake in Virgin following capital raising

Two Chinese firms have emerged with significant stakes in Virgin following the completion of its $1.1bn raising.

Virgin shares have been on a tear since the capital raising closed last Wednesday, soaring 11.6 per cent to 24c.

Virgin Australia has completed its long-awaited $1.1 billion capital raising that will help the airline shore up its balance sheet and tackle its debt pile.

The airline (VAH) is now officially 40 per cent owned by Chinese companies after it completed its $852 million capital raising as well as an additional $89m top-up placement to China’s HNA Innovation to boost the company’s stake in Virgin to 19.2 per cent.

The airline’s other Chinese investor — Nanshan Group — holds a 19.98 per cent stake in Virgin, having bought out the majority of Air New Zealand’s holding in the carrier earlier this year.

Virgin’s largest shareholders — which include Etihad Airways, HNA, Nanshan Group, Virgin Group, Singapore Airlines and Air New Zealand — all took up their full entitlement in the offer.

In total 89.5 per cent of eligible shareholders participated in the one-for-one non-­renounceable offer that was priced at 21c a share.

About 424 million new shares were not taken up in the offer but they were gobbled up by sub-underwriters of the deal which included Singapore Airlines, HNA and Virgin Group.

HNA Group was also allowed to top-up its investment in Virgin Australia to 19.2 per cent through the purchase of $89m worth of new shares. With that top-up done, HNA has now invested $US300m to establish its stake in Virgin.

Together with HNA’s previous payment of $159m to take a 13 per cent stake in Virgin, the Australian airline has now raised $1.1 billion.

The capital raising will be used to repay a $425m loan to shareholders and tackle the $3bn in debt that Virgin carries on its books.

Virgin shares have been on a tear since the capital raising closed last Wednesday, soaring 11.6 per cent to 24c.