Virgin Australia is planning to delay its initial public offering (IPO) and relisting on the Australian share market by about six months.
Anton Tagliaferro, manager, Mutual Funds, said: “Global banking turmoil and share market volatility could force a delay. We are in a period of instability and we are seeing cracks in the financial system. In a bullish market they may have got Virgin away at a decent price, but today it will struggle," as quoted by the Australian.
Bain Capital (Bain), the owners of Virgin Australia (VA), have engaged bankers Goldman Sachs, UBS and Australian advisory firm Barrenjoey to prepare for the initial public offering (IPO). Their task was to report on the best timing, structure and metrics to return VA to the Australian Stock Exchange (ASX).
As part of the mandates, the banks are expected to provide debt funding in the near term and help come up with a long-term capital structure for the airline. The near-term funding package is expected to be worth about $450 million.
Virgin Australia’s expected to seek a $3 billion-plus valuation on listing, which is equivalent to 7 to 8 times its net profit. The airline turned over $2.5 billion in the six months to December 31 for about a $125 million profit
Bain Capital bought the airline out of administration for $3.5 billion in 2020, with equity stakes taken by Richard Branson’s Virgin Group and Queensland government implying a market value of $1 billion shortly after.
Virgin Australia has a 30.8% share of the Australian domestic airline market, while Qantas has a 38.6% market share, Jetstar Airways has a 21.3% market share.