Whoever is charged with finding a buyer for Virgin Australia, there's two obvious places to start.
Virgin chief executive Paul Scurrah. The company's board is set to call in administrators following a meeting on Monday night Peter Braig
The first is BGH Capital, which
already has a team and advisers working on the case.
The second is another private equity player, which specialises in airline investments and whose interest in Virgin stretches back close to a decade.
That firm is Arizona-based Indigo Partners LLC, which is the owner of four low-cost airlines including Frontier Airlines in the United States, JetSMART (Chile), Volaris (Mexico) and Wizz Air (Hungary).
It is understood Indigo Partners' dealmakers have been sniffing around Virgin for years, but constantly hit hurdles in the shape of Virgin's jam-packed and stubborn share register and its big pile of debt which is now worth $5 billion.
Indigo Partners' tyrekicking hit a peak in 2015 when one-time strategic investor Air New Zealand was interested in selling its stake, sources said. Air New Zealand's investment peaked at 26 per cent and buying the Kiwi's shares would've been a quick way to become Virgin's biggest shareholder.
Indigo has remained around the hoop in the years since and with Virgin's difficult share register set to be erased and the debt reduced, it's expected to be back kicking tyres in no time.
Using COVID-19 to grow its portfolio
Interestingly, Indigo Partners has made no secret it could use the COVID-19 inspired downturn to grow its portfolio. One of the firm's principals, Brian Franke, was recently quoted as saying: “Our airlines today are in good shape, but we are looking for opportunities at airlines that don’t have as strong a balance sheet.”
And with Virgin's board to call in the administrators following a meeting on Monday night - and cite solvency concerns, the Australian airline definitely fits into the not as strong balance sheet category.
Deloitte is expected to get the administration gig, while advisers are also flocking to the various groups of lenders. You have to worry about the retail bond investors, who only bought their notes late last year. Their trustee is AET, owned by Sargon Capital, which is also in administration.
As for Virgin's bankers, Morgan Stanley and UBS, we expect they'll be keeping close to Deloitte and spruiking their knowledge of the business and the field of potential.
Deloitte will no doubt want a quick deal in an effort to keep Virgin's business together, as much as is possible in light of government-enforced travel restrictions which have sunk the airline.