Virgin Australia is reportedly set to launch its highly anticipated initial public offering (IPO) in a bid to raise $685 million, marking its first major return to the Australian Stock Exchange (ASX) since its 2020 administration.
Priced at $2.90 per share, the IPO will value the airline at $2.3 billion, according to a Reuters report citing the term sheet. The deal would mark a strong recovery since the company’s restructure under Bain Capital's ownership.
Strong turnaround drives investor interest
The IPO comes amid an upbeat period for the global airline sector, which has seen significant growth in recent years, with companies achieving record profits and stock rallies. In Australia, Virgin’s return to the public market will offer investors a chance to gain exposure to the nation's duopoly airline market, where competition is dominated by Qantas.
Analysts note that the IPO will likely attract attention due to the airline’s successful turnaround and its potential to challenge Qantas’ dominant position.
The move caps Virgin Australia's strong resurgence since its pandemic-era administration. Under Bain's leadership, the airline has streamlined operations, focusing on profitable domestic routes. The latest half-year results showed a record underlying earnings of $439 million, further bolstering investor confidence.
Virgin’s focus on profitability and its now-competitive position within the domestic market make it an attractive investment opportunity, according to analysts.
“Essentially, it’s a very different airline than it was in 2020, and it is far more attractive to investors,” said eToro market analyst Josh Gilbert. "Virgin’s extensive domestic network, which is proving to be a formidable competitor to Qantas, its 11-million-member Velocity loyalty program, and backing from Qatar Airways provide a solid foundation for its listing back on the ASX.”
Strong signal for IPO outlook
Investors will also be looking to recent IPO successes for clues on how Virgin’s offering, the first major IPO of the year, may perform. The 2024 listing of Guzman y Gomez, which saw shares surge 36% on debut, serves as a benchmark for Virgin’s potential.
The fast-food chain’s strong debut highlighted investor demand for well-known consumer brands with clear growth trajectories — a trend that could bode well for Virgin.
For now, Virgin Australia is aiming to capitalise on the current strength of the airline sector and the broader interest in well-known consumer brands with clear growth potential.
“A successful listing would not only serve as a big milestone in Virgin’s turnaround story but may also provide some optimism to the broader interest in local IPOs,” Gilbert said.