Virgin Australia $685 Million IPO Return After 4 Years
SYDNEY- Virgin Australia (VA) has initiated its return to the Australian sharemarket following a four-year absence, with bankers offering shares at $2.90 each for the highly anticipated ASX re-listing.
The initial public offering marks the culmination of years of restructuring under private equity ownership after the airline’s 2020 collapse.
Photo: Virgin Australia
Virgin Australia ASX Market Re-Entry
Private equity owner Bain Capital plans to sell approximately 30 per cent of Qantas (QF)‘s primary competitor, targeting $685 million through the offering while valuing the company at nearly $2.3 billion.
The $2.90 share price represents 7 times the airline’s expected earnings for the current financial year, according to bankers managing the sale.
This pricing strategy positions Virgin Australia (VA) shares significantly below Qantas (QF) valuations, which trade at approximately 10 times expected earnings for the same period.
The discount reflects Bain’s understanding that the airline must establish a performance track record as a listed entity while navigating current market conditions.
Photo- Robert Frola | Wikimedia Commons
Strong Investor Demand
Sources close to joint lead managers Goldman Sachs, UBS, and Barrenjoey report that demand from domestic and global anchor investors exceeds the offer size before the bookbuild opening. This strong interest materialises despite recent global market turbulence linked to trade policy uncertainties.
The ASX has surged 15 per cent from its April tariff shock low, creating a favourable window for Bain to execute Virgin’s long-awaited market return.
Qantas (QF) stock currently trades at record highs, providing additional market confidence for the aviation sector.
Photo: Virgin Australia
Qatar Airways Partnership
The IPO represents significant ownership restructuring following Bain’s October sale of 25 per cent to Qatar Airways (QR).
Under their partnership agreement, Virgin will launch expanded international flights using Qatar aircraft and crews, connecting Australian capital cities to Doha later this month.
Post-IPO ownership will see Bain’s stake reduced from 70.2 per cent to 40 per cent, while Qatar Airways (QR) will hold 23.4 per cent.
Virgin management will maintain 6.4 per cent ownership, with new sharemarket investors controlling the remaining 30.2 per cent.
Photo- Pexels
Market Positioning Strategy
Fund manager Jun Bei Liu from Sydney-based Ten Cap considers Virgin attractively priced, stating the IPO should perform well given current market conditions. Liu, who holds Qantas (QF) shares, expresses interest in Virgin investment, noting the airline’s meaningful transformation over recent years.
The approximately 30 per cent discount to Qantas (QF) valuation reflects both the airline’s need to establish public market credibility and current market volatility.
Fund managers have until Thursday afternoon to submit share bids, while retail investor bids through brokers are due Friday morning.
The shares are expected to commence ASX trading on June 26 under the proposed ticker VGN.
Photo- Wikipedia
Historical Context
Virgin Australia’s previous public trading experience ended poorly, with the 2020 collapse following administration proceedings during COVID-19 travel restrictions.
The original public entity suffered from limited daily trading volumes and rarely exceeded its IPO price, with most stock controlled by largely inactive airline investors unwilling to provide additional pandemic funding.
Bain Capital acquired the struggling carrier in 2020, implementing extensive restructuring before removing it from the share market. The current IPO represents a strategic repositioning after years of operational improvements and financial stabilisation under private equity management.
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