How a Virgin IPO could make life even tougher for Qantas
A spate of drought-busting IPOs in the US has ignited hopes the market for new listings could reopen in Australia. And the biggest of those is Virgin.
When Virgin Australia collapsed into administration in April 2020, it left a gaping hole in the local aviation market and granted an effective monopoly to its main domestic rival — even if a grounded Qantas couldn’t immediately exploit it.
Months later, Bain Capital took Virgin out of receivership to begin a long resuscitation process of the carrier. Fast forward three years and the private equity firm still has plans to eventually return the much leaner airline to the ASX in what will be one of the most closely watched IPOs in the country.
Bain pulled the process for a Virgin float earlier this year, citing market conditions. Whether those market conditions have improved since then is in the eye of the beholder. On the one hand, the ASX 200 is off its lows but barely above water for the year. On the other, a spate of successful major drought-busting IPOs in the US has boosted hopes that the equity capital markets could reopen as well in Australia.
The one thing that has inarguably changed, though, is Qantas. Since Bain pulled the Virgin process, its main rival's reputation, profits and share price have all been damaged by a deluge of scandals that culminated in the early departure of its former CEO Alan Joyce. The question is whether this hinders or helps Bain in its desire to float Virgin.
