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West Australian
2 days ago
- Business
- West Australian
Virgin Australia returns to sharemarket with a bang
Virgin Australia has returned to the sharemarket after a five-year hiatus with a massive $685m initial public offering on Wednesday, and it could influence the future health of the Australian economy. In the biggest IPO of the year, the Bain Capital-owned airline has decided to return to the ASX amid a rise in domestic tourism and spending. The offer will almost halve Bain's stake in the airline from about 70 per cent to 39.4 per cent. Qatar Airlines, which recently invested in Virgin, will reportedly keep its 23 per cent holding. If successful, Virgin's listing in the market will be seen as a sign of a bright future for the Australian economy, as investors signpost the potential for the nation's consumer spending to recover. If it fails, it could point to the opposite. So far, all signs point to a successful IPO, as domestic travel demand recovers and the two recent RBA rate cuts ease the pressure on Australian households. Qantas has been trading at a record high, and the ASX itself has been overwhelmingly up despite swings. 5.1 million passengers were on domestic commercial flights in Australia as of March, a figure sightly below the same time last year but more than four times the numbers in mid-2021. Despite Virgin's voluntary administration in 2020 following Covid-19 travel restrictions, after which it was acquired by US private equity company Bain, it now corners 34.4 per cent of the domestic market share as of March 2025. It is not lagging much behind Qantas, which holds 37.5 per cent, according to the Australian Competition and Consumer Commission. The death of other budget airlines such as Bonza and Rex has only boosted these two major players. Virgin is also planning to resume long-haul international flights made possible by its partnership with Qatar. The airline is conducting its IPO using a front-end book-building method, where investor bids are submitted before the prospectus receives approval from Australian regulators. According to the term sheet, institutional investors were able to their bids up to Thursday, with the stock expected to begin trading on June 24. Virgin's IPO will be the largest in Australia following the DigiCo Infrastructure REIT launch that raised $2bn in December before a 30 per cent downturn in share price. Experts say the Virgin IPO could offer investors a unique entrance into the Australian airline market, but it has its own risks. 'Virgin Australia's planned return to the ASX via a $A685m initial public offering is the first major IPO of 2025, and one to watch closely,' eToro market analyst Josh Gilbert said. 'The IPO, priced at $A2.90 per share, gives the airline a market cap of $ It follows the on-and-off IPO over the last two years when the airline sector has moved from strength to strength, with companies around the world announcing record profits and seeing shares rally. 'Under Bain's direction, Virgin Australia has streamlined operations, focusing on profitable domestic routes, and achieved record underlying earnings of $A439m in the latest half year. 'Essentially, it's a very different airline than it was in 2020 and it is far more attractive to investors. Having only one real competitor in the landscape, Qantas, makes the offer uniquely appealing.' However, the investment could also be a major risk. 'Investors may view Virgin's IPO as an opportunity to gain exposure to Australia's duopoly airline market at a compelling valuation that will trade at a discount to Qantas,' Mr Gilbert said. 'Although the airline sector has had a great few years, investors should be mindful of its razor-thin margins and cyclical risks, particularly if demand slows amid slowing consumer spending.'
Perth Now
2 days ago
- Business
- Perth Now
Why you should care about Virgin IPO
Virgin Australia has returned to the sharemarket after a five-year hiatus with a massive $685m initial public offering on Wednesday, and it could influence the future health of the Australian economy. In the biggest IPO of the year, the Bain Capital-owned airline has decided to return to the ASX amid a rise in domestic tourism and spending. The offer will almost halve Bain's stake in the airline from about 70 per cent to 39.4 per cent. Qatar Airlines, which recently invested in Virgin, will reportedly keep its 23 per cent holding. If successful, Virgin's listing in the market will be seen as a sign of a bright future for the Australian economy, as investors signpost the potential for the nation's consumer spending to recover. If it fails, it could point to the opposite. The performance of Virgin's IPO could reflect the sentiment surrounding the future of the Australian economy. NewsWire / Nicholas Eagar Credit: Supplied So far, all signs point to a successful IPO, as domestic travel demand recovers and the two recent RBA rate cuts ease the pressure on Australian households. Qantas has been trading at a record high, and the ASX itself has been overwhelmingly up despite swings. 5.1 million passengers were on domestic commercial flights in Australia as of March, a figure sightly below the same time last year but more than four times the numbers in mid-2021. Despite Virgin's voluntary administration in 2020 following Covid-19 travel restrictions, after which it was acquired by US private equity company Bain, it now corners 34.4 per cent of the domestic market share as of March 2025. It is not lagging much behind Qantas, which holds 37.5 per cent, according to the Australian Competition and Consumer Commission. The death of other budget airlines such as Bonza and Rex has only boosted these two major players. Qantas and Virgin have been boosted by the death of competing airlines, preserving their own market shares. NCA NewsWire / Nicholas Eagar Credit: NCA NewsWire Virgin is also planning to resume long-haul international flights made possible by its partnership with Qatar. The airline is conducting its IPO using a front-end book-building method, where investor bids are submitted before the prospectus receives approval from Australian regulators. According to the term sheet, institutional investors were able to their bids up to Thursday, with the stock expected to begin trading on June 24. Virgin's IPO will be the largest in Australia following the DigiCo Infrastructure REIT launch that raised $2bn in December before a 30 per cent downturn in share price. Experts say the Virgin IPO could offer investors a unique entrance into the Australian airline market, but it has its own risks. 'Virgin Australia's planned return to the ASX via a $A685m initial public offering is the first major IPO of 2025, and one to watch closely,' eToro market analyst Josh Gilbert said. Experts are watching the major IPO closely. NCA NewsWire / Nicholas Eagar Credit: NCA NewsWire 'The IPO, priced at $A2.90 per share, gives the airline a market cap of $ It follows the on-and-off IPO over the last two years when the airline sector has moved from strength to strength, with companies around the world announcing record profits and seeing shares rally. 'Under Bain's direction, Virgin Australia has streamlined operations, focusing on profitable domestic routes, and achieved record underlying earnings of $A439m in the latest half year. 'Essentially, it's a very different airline than it was in 2020 and it is far more attractive to investors. Having only one real competitor in the landscape, Qantas, makes the offer uniquely appealing.' However, the investment could also be a major risk. 'Investors may view Virgin's IPO as an opportunity to gain exposure to Australia's duopoly airline market at a compelling valuation that will trade at a discount to Qantas,' Mr Gilbert said. 'Although the airline sector has had a great few years, investors should be mindful of its razor-thin margins and cyclical risks, particularly if demand slows amid slowing consumer spending.'
Business Times
3 days ago
- Business
- Business Times
Virgin Australia returns to stock market with launch of A$685 million IPO
[SYDNEY] Virgin Australia is set to return to the stock market after a five-year absence, with the Bain Capital-owned airline launching a A$685 million (S$572 million) initial public offering on Wednesday (Jun 4) amid a rebound in domestic tourism. The offering, Australia's largest for the year so far, will see Bain's stake drop to 39.4 per cent from about 70 per cent, while Qatar Airways, which recently bought into the airline, will retain a 23 per cent holding, according to a deal term sheet seen by Reuters. It's one of the most closely watched deals in Australia in years as a successful listing will be seen as a vote of confidence in prospects for a solid recovery in the nation's consumer spending. The shares will offered at a fixed price of A$2.90 per share, the term sheet showed, valuing the company at A$2.32 billion on a fully diluted basis. Bain, which bought Virgin for A$3.5 billion including liabilities, declined to comment on the deal details outlined in the term sheet. The US private equity company acquired the airline in 2020 after it went into voluntary administration, hit hard by Covid-induced travel restrictions. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Auspicious start Prospects look good for a successful IPO. Investors lodged indicative bids for Virgin before book building began that would cover the size of the deal, a bookrunner's message sent on Wednesday showed. Domestic travel demand is also recovering, helped by two recent interest rate cuts. That in turn has contributed to shares in rival Qantas trading at a record high. Australia's ASX200 is also trading close to an all-time peak reached in February. As part of its revival efforts over the last few years, Virgin pared back its international business. But it is due to resume long-haul flights through its partnership with state-owned Qatar. The two airlines are planning 28 new weekly return services between Doha and major Australian airports. In March, 5.1 million passengers were carried on domestic commercial airlines in Australia, official figures show. That's a slight dip on last year but more than a four-fold increase from the peak of Covid in mid-2021. 'Ongoing strong local demand, slow overall capacity growth and reduced competition in the domestic market have also benefited the revived Virgin Australia,' said Simon Elsegood, head of research at CAPA Centre for Aviation. He noted that the failures of rivals Bonza and REX in the mainline jet market have only benefited Virgin and Qantas. Virgin has a domestic market share of 34.4 per cent as of March, not far behind Qantas which had 37.5 per cent, according to an Australian Competition and Consumer Commission report. The airline's IPO is being carried out through a front-end book-building process, which means investor bids are taken ahead of the prospectus being reviewed and approved by Australian regulators. Institutional investors will be allowed to lodge their bids for the shares until Thursday and the stock is due to start trading on June 24, the term sheet showed. The deal will be the largest IPO in Australia since DigiCo Infrastructure Reit raised A$2 billion in December. DigiCo's shares are trading down about 30 per cent since its market debut. REUTERS
Business Recorder
3 days ago
- Business
- Business Recorder
Virgin Australia seeks to raise $442.8 million in IPO, term sheet shows
Bain Capital-owned Virgin Australia is looking to raise A$685 million ($442.78 million) in an initial public offering, according to a term sheet seen by Reuters on Wednesday. The company has set the offer price at A$2.90 per share and the offer size reflects 30% of Virgin's total issued capital. Bain Capital did not immediately respond to a Reuters request for comment. The airline, Australia's second largest behind Qantas, will sell 236.2 million shares in the IPO to value the company at A$2.32 billion on a fully diluted basis, the term sheet showed. Virgin will have an enterprise value of A$3.6 billion, taking into account its net debt of A$1.31 billion. Bain's shareholding will reduce from about 70% to 39.4% following the IPO, while Qatar Airways will retain a 23% stake, according to the term sheet. Institutional bookbuilding will close on Thursday and Virgin's shares are due to start trading on the Australian Securities Exchange (ASX) on June 24, the term sheet showed. The IPO is being carried out through a front-end book building process, which means investor bids are taken ahead of the prospectus being reviewed and approved by Australian regulators. Qatar Airways wins approval for stake in Virgin Australia Virgin's IPO has been in the making for more than two years but was put on hold due to volatile global financial markets during 2023 after investment banks were appointed. Bain bought Virgin for A$3.5 billion ($2.45 billion) including liabilities five years ago after it was placed in voluntary administration, the closest Australian equivalent to Chapter 11 bankruptcy. Virgin collapsed in 2020 following tough COVID-19 restrictions that damaged the global airline industry. Australia's benchmark S&P/ASX200 index has gained 3.77% so far in 2025.
Yahoo
3 days ago
- Business
- Yahoo
Virgin Australia seeks to raise $442.8 million in IPO, term sheet shows
(Reuters) - Bain Capital-owned Virgin Australia is looking to raise A$685 million ($442.78 million) in an initial public offering, according to a term sheet seen by Reuters on Wednesday. The company has set the offer price at A$2.90 per share and the offer size reflects 30% of Virgin's total issued capital. Bain Capital did not immediately respond to a Reuters request for comment. ($1 = 1.5470 Australian dollars) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
