Jayne Hrdlicka to resign as CEO

[Bagpuss]

Has Bain and the other shareholders extracted any $$$ prior to the IPO?

Unsure what you mean. But it's publicly known they have all already received their investment back in full.

If it's a profitable airline I had no idea why people think it will be sold. Just as well keep running it and make more $$$.

 

[Saab34]

Because they are only interested in the pump n dump. They don’t care about the longevity. This is purely people in the PE world trying to milk a cow for their own pockets. How far can you milk it is the question.

They would sell out tomorrow if they had the right price. Don’t be fooled by the ‘we are here for the long term’ ‘ we care about the long term prospects’

They will be out as soon as $$ dictates.

 

[Bagpuss]

They will be out as soon as $$ dictates.

Surely people who buy shares do exactly the same thing?

 

[ozstamps]

Has Bain and the other shareholders extracted any $$$ prior to the IPO?

Virgin owes Bain zero, and that has been the case for a while now. They have all their outlay back already, in cash, plus some.

Whatever they get is all total gravy now.

If they see Pilot strikes ahead etc, and other industrial unrest, and the need to pump in mega bucks of THEIR money to finally upgrade the fleet, they'll be on the first stagecoach back to Dallas.

These American raider folks are 'rape and pillage and move on' operators.

They should have exited last year, and what they got then will have exceeded what they get this year.

 

[moa999]

PE is driven by IRR on investments.

So in general they will be trying to get cash out as quickly as possible, but can also hold onto investments when they see growth, or valuations (multiples) improving.

And there are many ways they can skin that cat. Now that Virgjn is back to profit I'd expect them to increase borrowings and likely distribute that out.

(One of the more famous Australian examples is the PE buyout of Dick Smith from Woolworths. Within days of the acquisition they had a massive sale to clear out old stock sitting in warehouses and had recovered their investment in weeks)

 

[BAM1748]

Virgin owes Bain zero, and that has been the case for a while now. They have all their outlay back already, in cash, plus some.

Whatever they get is all total gravy now.

If they see Pilot strikes ahead etc, and other industrial unrest, and the need to pump in mega bucks of THEIR money to finally upgrade the fleet, they'll be on the first stagecoach back to Dallas.

These American raiders folks are rape and pillage and move on operators.

They should have exited last year, and what they got then will have exceeded what they get this year.

They don't use their own money, they would borrow with the Bain 'reputation' to back up the borrowing. PE business would rarely if at all use own funds.

 

[Must...Fly!]

Exactly, my understanding is they're at the mercy of their clients and whatever agreements they struck when the initial money was handed over. Of course they can negotiate accordingly. However, now that interest rates are high, attracting replacement capital comes at a cost and the calculation of risk changes as well, given that higher interest rates mean you require a higher IRR.

 

[moa999]

They don't use their own money, they would borrow with the Bain 'reputation' to back up the borrowing. PE business would rarely if at all use own funds.

The whole point of PE is to invest a fund (which is generally supplied by institutional investors) and make a return.

Yes they will generally use a lot of debt to minimise equity in and maximise returns.

But in VAs case - a loss making airline that had just gone into administration, that also had a lot of debt like funding (airplane leases) there would have been less debt funding than normal.

 

[Quickstatus]

Has Bain and the other shareholders extracted any $$$ prior to the IPO?

Yes
$730M capital return before the IPO. But did VA2 take out a loan to partly fund that?

 

[MooTime]

PE plan is 90% of the time to trade the buy.

Always exceptions.

If the ROI was succeeding like 40% you can bet they'd be doing no such road shows ..yet, but on a low margin, low profit based airline business the plan is the favorited way to ditch it.
Take the money n reinvest elsewhere.

 

[ThatMrBlake]

Some talk in the Australian today around a push to get Paul Scurrah back in the pilot seat. PS himself has labeled it a long shot but with Pacific National up for sale itself, it may not be completely far fetched.

Interesting ending also to an article about the IPO attempts so far also in the AFR today which may hint at this:

“ Bain is interviewing external and internal candidates for Virgin’s top job, with IPO presentability almost certainly on their mind. If Bain wants to have Virgin listed this year it is likely to require a chief executive that is known to institutional investors whether that be a former Qantas executive or a well-regarded transport executive.”