Virgin Australia IPO Discussion

[cove]

Yes @QF WP I struggled to get a few from Crestone in this IPO. I got just over 6% of my bid. It isn’t anything too special and there are better industries to consider.

 

[RooFlyer]

Volume appears low? I can’t find a decent price/vol graph. If volume was low, might’ve expected a better price?

Noting that Qantas did almost twice as well today, to this point

 

[SeaWolf]

Some coverage from the ABC.

Five years ago it collapsed. Now Virgin Australia is back on the ASX

Virgin Australia's shares have rallied by about 8 per cent as it has listed on the stock exchange five years after its collapse. The airline's initial public offering was priced at $2.90 per share, raising $439 million for the company.

www.abc.net.au

 

[cove]

Actually the money was not going into Virgin Australia. It was going to the vendors of those shares.

 

[SYD]

Actually the money was not going into Virgin Australia. It was going to the vendors of those shares.

Yep, this isn’t a Capital raising exercise.

Hopefully the next tranches will have an element of capital alongside Bain payback.

 

[RooFlyer]

Hopefully the next tranches will have an element of capital alongside Bain payback.

Okay, so now the question is when will the next trache be up for sale?

They’ve said they don’t need capital and in fact rather strongly said that in the media this morning. Debt would be a better way to go anyway if the balance sheet would support it.

Once the airline gets back into stable operations, my own tip is that there would be a sale of 5-10% to a pension fund somewhere

 

[SYD]

Okay, so now the question is when will the next trache be up for sale?

They’ve said they don’t need capital and in fact rather strongly said that in the media this morning. Debt would be a better way to go anyway if the balance sheet would support it.

Once the airline gets back into stable operations, my own tip is that there would be a sale of 5-10% to a pension fund somewhere

Bain probably don’t want Capital raising because that usually dilutes their share (ie often requires issuing new shares - as well as selling some of their existing interest).

But they can’t just keep saying it’s a well run business - pay us back for doing the hard yards.

 

[RooFlyer]

Snippets in today's AFR that I hadn't heard before. My bolding.

“It’s been a great couple of days,” [after listing] Murphy [Bain Capital's Australian head] tells Chanticleer in Bain’s Sydney office. Bain has agreed not to sell its remaining 36 per cent stake for 12 months, but Murphy says “getting out of the gate strong is just really good”.

Murphy won’t discuss Bain’s returns from Virgin, but back-of-the-envelope calculations put its cash return to this point at about 3.5 times its original investment. If Virgin was able to sell its remaining stake – worth about $1 billion on paper – that return would rise to about 5.5 times.

Makes sense to effectively escrow their remaining holding. Otherwise it would be overhanging the market and price. Not a bad cash return, either!!

Murphy says an IPO was the only real exit option Bain considered for Virgin, and advisers to help it with a float were in place as early as 2021, a full year before Murphy himself felt Virgin was really going to be a success.

May account for the higher than usual fees paid!

But less appreciated is how this deal is seen inside Bain. While Murphy says it is not the firm’s biggest global deal by any stretch, it’s “right up there in the top two or three most complicated deals that we’ve done in our history”.

You can read the reasons why in the article, if you can climb the paywall.

 

[cove]

Yes @RooFlyer I still get the AFR electronically because it isn’t printed in Perth. A good deal for Bain and a pretty good deal for Qatar.