Bain picks UBS, Goldman and Barrenjoey on potential Virgin IPO

Goldman Sachs, UBS and Barrenjoey have been signed up by Virgin Australia’s owner Bain Capital to advise on the potential float of Australia’s second-biggest carrier.

Private equity giant Bain announced it would seek advice on the potential initial public offering in January, but is yet to confirm timing or even whether it’s actually committed to relisting the airline.

As first reported by The Australian, eight banks including Morgan Stanley, Bank of America, Credit Suisse, RBC and Jeffries had pitched for the mandate.

According to sources close to the matter, Goldman Sachs, UBS and Barrenjoey are joining law firm Gilbert and Tobin and Reunion Capital Partners who have also landed what’s likely to be the biggest public offering of 2023. The mandates were signed earlier this week.

Bain valued Virgin at about $1 billion when it restructured the airline at the beginning of 2021 but is expected to seek a valuation of more than $3 billion if the listing goes ahead.

It will retain a significant shareholding in the event the airline does relist, with partner Mike Murphy saying in January the group has been impressed with the airline’s transformation since it was plucked out of administration and near-demise for $3.5 billion in 2020.

“Prior to COVID-19, Virgin Australia had a proud history as a public company. While there is currently no set timetable, at some point in the future, if any IPO does happen, Bain Capital would welcome public market investors joining us as shareholders in what is a great Australian company,” Murphy said in January.

The appointment of the banks comes amid reports that Virgin is considering taking on new debt to hand cash to owner Bain Capital before the initial public offering.

According to Bloomberg, the carrier has reached out to investment banks to outline a potential so-called dividend recapitalisation, under which Virgin would issue debt before the IPO. The proceeds would subsequently be used to pay dividends to Bain.