Bain Capital angling to raise circa $750m for Virgin Australia IPO

Virgin Australia is the country’s second-largest carrier with about 19 million passengers. Picture: iStock

Virgin Australia is believed to be targeting an initial public offering worth around the $750m mark, say sources, as it gears up to float on the Australian Securities Exchange as early as June.

DataRoom understands the group could be looking at a primary selldown of about 20 per cent of the business, which is now 25 per cent owned by Qatar Airways.

Overall, prospective investors have been told to think about an IPO in the ballpark of $US500m, which equates to between $750m to $800m when converted to Australian dollars.

DataRoom first revealed plans by Virgin’s owner, Bain Capital, to move towards another listing attempt with informal meetings to introduce the new chief executive, Dave Emerson.

The non-deal roadshow meetings started on Monday, as also first flagged by this column.

Some have said it may be better for the carrier to list around August so it could provide an earnings forecast for its prospectus over a tidy financial year period, but it is understood it would be acceptable to provide a forecast to December.

But, the understanding is Bain Capital and Virgin’s advisers, which include Barrenjoey, Goldman Sachs, UBS and Reunion Capital, are eager to move swiftly to get Virgin listed in a move to capitalise on positive market conditions and will try to launch the IPO in May and list in June.

Rival carrier Qantas is trading with a strong share price and there’s talk in the market Bain will take a reasonable position on the pricing of the carrier.

Last time there were suggestions Bain could be looking at a valuation higher than the country’s national listed carrier, Qantas, when it was trading at three to four times its earnings before interest, tax, depreciation and amortisation; now it is close to five or six times.

The airline was previously listed but was recapitalised by Bain Capital during the pandemic in 2020 when it collapsed, paying $700m and taking on $5.15bn of its debt.

Virgin tested the waters for an IPO in 2023.

Mr Emerson, Virgin’s former chief commercial officer, was named as the replacement for Jayne Hrdlicka this month.

Virgin also last year sold a 25 per cent stake in the business to Middle Eastern carrier Qatar Airways for a price speculated to be about $750m, implying a $3bn value on the carrier.

Virgin Australia is the country’s second-largest carrier, taking about 19 million passengers and employing 7000 staff, with a domestic network of 66 routes, a targeted short-haul international network and the country’s third largest loyalty program, Velocity.

Barrenjoey is also bringing Koala Furniture to the market for a $100m initial public offering as its raises funds to pay for its US expansion.

The other company aiming to float towards the end of the year through Highbury Partnership, JPMorgan and Morgan Stanley is GemLife, a land lease real estate business previously on the market for over $2bn.

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.

IPOs are happening amid a reshuffle of equity capital markets advisers, with former Goldman Sachs head of equity capital markets for ANZ Ian Taylor moving to run the operations at the Wall Street giant’s rival, Bank of America.

He replaces Yuta Kambe who moves to an ECM role in Japan.

Mr Taylor ran ECM at Goldman’s in Australia and New Zealand before joining APM.

In that time, Aaron Lamshed was head of Goldman’s ANZ ECM team until December when he departed.

He now works at Morgans Financial as its Head of Corporate Finance.