Bain Capital bought the airline out of management for $3.5 billion in 2020, with equity stakes from Richard Branson’s Virgin Group and the Queensland Government implying a $1 billion market value shortly thereafter.
However, the issuance of the new shares shows that the private equity firm is significantly increasing its valuation of the airline, even though its value applies only to the management equity plan asset class.
The new shares were issued as a result of several management changes at Virgin.
leadership change
Virgin Chief Financial Officer David Marr will move into the newly created position of Chief Development Officer to focus specifically on float, while former A2 Milk and Jetstar CFO Race Strauss will replace him from March.
Ex-Macquarie chairman Peter Warne and former Goldman Sachs chief executive Pippa Downes have also joined Virgin Australia’s board. Mr Warne is seen as the frontrunner on the way to becoming chairman of the relisted airline.
Both new directors deal with sensitive conflicts of interest at pension funds where they also work. Mr. Warne chairs UniSuper’s investment committee while Ms. Downes is also a member of AustralianSuper’s investment committee.
They would withdraw from all discussions about the airline if those talks got as far as their powerful investment committees, although a rebuff might be unnecessary if the decision to invest in the IPO is finalized at lower levels before they reach the funds’ investment committees reached.
Bain Capital fired the starting gun on Virgin’s float process in January, saying it would seek advice from investment banks on an IPO and set up an in-house team to work solely on the float pitch.
Key rival Qantas’ share price is up 42.5 per cent to $6.50 over the past six months as travel returns faster than expected after lockdowns have largely ended.
Bain is expected to retain a large stake in Virgin when it eventually goes public.
It took six years to bring its last major ASX company, MYOB, back to the stock market, in which it initially held a 56 percent stake, which it then slowly scaled back over the next four years.
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