Advisers for the Bain Capital-owned airline Virgin Australia are believed to be starting the process of courting investors in the next fortnight for an initial public offering of the country’s second largest domestic carrier that could involve them first locking in cornerstone investors.
DataRoom understands that investor interest from a select group of parties will be tested in the coming days, and should demand be there for a listing, their commitments could be locked in ahead of an IPO, likely slated for June.
It comes as the share price of rival Qantas has rallied almost 62 per cent in the past year.
The Australian reported on Tuesday that Qantas and Virgin now control 98 per cent of the market, with regional carrier Rex only 1.7 per cent after retreating from big city markets since its financial collapse.
Sources believe conditions are favourable for a listing of an Australian airline.
Virgin Australia said it had made a record $439m in underlying earnings for the half year.
The Australian Competition and Consumer Commission’s airline monitoring report showed that Virgin Australia flew 34.4 per cent of domestic passengers, down from 35 per cent in late 2024.
DataRoom reported in March that Virgin’s Dave Emerson-led management team had launched a non-deal roadshow for its IPO.
The business was purchased by Bain Capital in 2020 after it collapsed, for $700m, when it had about $5.15bn of debt.
Working on the IPO are Barrenjoey, Goldman Sachs and UBS.
A deal was earlier expected to see the airline list with a market value at around $3bn.
Sources say that the market was eager to pay 5 to 6 times net profit for Virgin, but the private equity owner would likely want a price equating to eight or nine times.
Advisers may opt to lock in a small IPO at a higher price through a cornerstone process in a similar way to how Guzman y Gomez listed last year.
However, it may determine to move towards a larger selldown at a lower price, and in the case a cornerstone process would be less likely.
Given the volatile market conditions, most believe that the former is the most likely scenario.
Already, Bain Capital has sold 25 per cent of Virgin Australia to Middle Eastern carrier Qatar Airways for a price at about $750m, valuing the airline at $3bn.
Virgin Australia is the country’s second-largest carrier with 19 million passengers and 7000 staff.
The airline also has a domestic network of 66 routes and a targeted short haul international network.
A valuable part of Virgin is its loyalty program – it is Australia’s third largest, with 11 million members and 80 partnerships.
Also making efforts to float this year is the land lease real estate business GemLife, through JPMorgan, Morgan Stanley and Highbury Partnership.
Site visits for investors were held this week ahead of non-deal roadshow, otherwise known as investor education meetings, in Asia next week.
The business is owned by the Puljich family and sells manufactured homes to the 50-plus section of the market on Australia’s east coast.
It was previously on the market for $2bn and may sell down several hundred million dollars, depending on market demand.
The land lease market is in demand from investors, as evidenced by listed rivals, Ingenia and Lifestyle Communities that are both trading at over 17 times their net profit.
Investors are likely betting on stronger demand for property with falling interest rates.
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