Bain Capital is understood to have put its initial public offering plans for Virgin Australia back on the runway, with the private equity firm’s advisers now angling for a listing by Christmas.
It comes as the Boston-based private equity firm is poised to appoint executive Paul Jones as the new chief executive for the $3bn carrier, according to sources, after he was tipped by The Australian earlier this month to be one of two candidates in the running.
The understanding is that the move to accelerate the float plans comes after Guzman y Gomez soared by more than 30 per cent on the first day of trade for its IPO on Thursday.
The IPO price before the listing took the Mexican restaurant chain’s market value to $2.2bn.
The value has been subject to heavy debate as its prospectus indicates it can roll out 1000 new Australian outlets in two decades taking its domestic scale to that similar to McDonald’s.
However, the IPO size was small – only $335.1m.
It is believed that advisers on the deal will use the same tactic with the Virgin float, where Bain only sells down a very small holding simply to get the airline listed, although the understanding is that no final decision has yet been made by Bain Capital.
The private equity firm purchased the previously listed Virgin Australia out of voluntary administration in 2020 for $700m in equity and took on its $5.15bn of debt, and had planned to re-list the carrier last year.
It hired investment banks Goldman Sachs, UBS and Barrenjoey – the same bank on Guzman y Gomez – for the float, while retail brokers including Wilson’s Advisory, Ord Minnett and Shaw and Partners were on the ticket.
The plan has been for Virgin Australia to have about $1.97bn in borrowings, with a $3bn-odd valuation.
However, it called off the deal amid weak market conditions, and chief executive Jayne Hrdlicka dealt with the passing of her husband and she stepped down in February.
Perhaps this time around, Virgin has a key cornerstone investor for the deal – potentially an offshore carrier.
DataRoom reported last year that Qatar Airways had been in talks to take a significant stake.
In the past, Virgin Australia was previously owned by Singapore Airlines with a 20 per cent, Etihad with a 21 per cent stake, China’s Nanshan Group with 20 per cent, Richard Branson with 10 per cent, and the remainder equity investors, so an investment by Qatar would see it return to foreign carrier hands.
Another bright spot for the IPO market is that Redox, which listed last year at $2.55 in what was a tough time in the market, is now trading at around $3.18.
Meanwhile, the share price of Virgin’s rival Qantas has staged a recovery since the start of the year after facing a sell off on the back of poor performance, which will give Virgin’s IPO hopes some momentum.
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.
Last year, fund managers interested in the float were told that the airline’s borrowings were just under $2bn at December 2022.
A valuable part of Virgin is its loyalty program - it is Australia’s third largest, and it has 11 million members with 80 partnerships.
Last year, Virgin Australia was understood to be generating about $400m in annual net income.
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