In what would be one of the country's largest initial public offerings (IPOs) of the year, the private equity owners, Bain Capital is considering re-listing its Virgin Australia airline – Australia's second biggest carrier, according to a report by Reuters.
One expects to tick all the boxes for success, unless they get greedy. Bain Capital is reportedly planning to retain a significant holding in the business as aport of any IPO.
The report cites a statement from Bain as confirming that the private investment manager is seeking advice on the timing and structure of any return to the Australian Securities Exchange as well as highlighting that a final decision on whether to proceed or not .
"In the coming months we will consider how to best position Virgin Australia for continued growth and long term prosperity," Mike Murphy, a Bain Capital Sydney based partner, said in the statement.
Unnamed sources have confirmed that boutique firm Reunion Capital has been appointed as a financial advisor on the deal, and will oversee the appointment of investment banks to lead any future IPO.
Bain bought Virgin Australia for AUD3.5 billion ($2.45 billion) including liabilities in 2020 after the airline was placed in voluntary administration. Creditors approved the buyout in September 2020.
Aviation market conditions have improved substantially since then after Australia's state and international borders reopened. Virgin has a strong balance sheet at present.
The administration allowed it to shed the bulk of its $6 billion in debt. It would appear that there is no bank debt on the Virgin balance sheet and its only liabilities are for aircraft leasing.
Virgin has restructured its fleet to build around Boeing 737 to the same size it was before the pandemic and closed its previously money-losing international and budget divisions.
The potential listing comes as Qantas is poised to post a first-half underlying profit of A$1.35 billion to A$1.45 billion next month, a sharp turnaround from last year's underlying loss before tax of A$1.28 billion.
There were just $614.2 million worth of IPOs in Australia in 2022, down nearly 93% from $8.4 billion a year earlier, Refinitiv data showed.
Expectations are upward that IPO markets will improve in 2023 as interest rates in most major markets are forecast to soon peak amid signs inflation is starting to moderate.
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