Virgin Australia Airlines Pty Ltd. is close to paying A$730 million ($494 million) to its private equity owner Bain Capital, months before a possible listing in Sydney, according to a person familiar with the matter.
The planned capital return is almost exactly the same size as the amount that Bain paid for Virgin Australia’s equity in 2020, said the person, who asked not to be identified as they weren’t authorized to disclose the information publicly. The A$3.5 billion figure announced at the time included the airline’s debt, the person added.
In a note to staff on Wednesday seen by Bloomberg News, Virgin Australia Chairman Ryan Cotton said a capital return to the airline’s shareholders should be finalized in coming days, though he didn’t mention a figure. The Australian Financial Review reported earlier on the amount of the capital return to Bain.
The payout gives the US private equity firm an immediate return ahead of the Australian airline’s plan to become a publicly listed company once again, in which Bain could see a further profit on its investment. Virgin Australia collapsed under a pile of debt in 2020, just weeks into the pandemic. It has transformed itself from a loss-making entity into a profitable carrier by cutting costs, simplifying its fleet and tapping a huge post-Covid rebound in travel demand.
In his note to Virgin Australia employees, Cotton said “our business is in good shape” and planning for the IPO was “well advanced.”
“While there is still no date set and our ultimate window of opportunity will depend on market conditions, we are hopeful this process will progress over the coming quarters,” he said.
He also said staff will receive their full profit-share incentive — 6% of salaries — and the remaining payments will be made in June.
Goldman Sachs Group Inc., UBS Group AG and Barrenjoey Capital Partners Pty Ltd. have been selected as lead managers for the airline’s planned IPO, Bloomberg News has reported. It may seek to be valued at an earnings multiple close to that of Qantas Airways Ltd., Australia’s largest airline.
