Virgin Blue IPO 10 times oversubscribed

[Wirraway]

Dow Jones
Friday December 5, 15:43 PM AEDT

Australia's Virgin Blue/IPO: Top End Of Range

SYDNEY (Dow Jones)--Virgin Blue said Friday its initial public offer price has been set at A$2.25 a share, which values Australia's second-biggest airline at A$2.3 billion.

The IPO was 10 times oversubscribed following strong demand from retail and institutional investors in Australia and abroad, the airline said.

Virgin Blue Chief Executive Brett Godfrey said he was delighted with the success of the IPO, which leaves the company well capitalized to fund growth over the medium to long term.

"Virgin Blue has achieved outstanding growth since the commencement of operations back in August 2000, and we now have sufficient cash to not only meet our objectives going forward, but also to continue to lead the low-cost, low-fair airline industry in Australia," Godfrey said in a statement.

Virgin Blue will list on the Australian Stock Exchange on Monday at 12:00 AEDT.

The final offer price is at the top end of the indicative price range of A$1.80 to A$2.25 a share.

Virgin Blue, which was established by U.K. entrepreneur Richard Branson in 2000, has grabbed 30% of the local market and forced Qantas Airways Ltd. to revamp its local operations.

Branson, who sold a 50% stake to Australian transport group Patrick Corp. last year, will sell down his stake further in the IPO. Branson, through his privately held Virgin Group will retain a 25.1% stake in Virgin Blue.

Branson said 250 institutions worldwide, thousands of retail investors and 94% of Virgin Blue's employees have subscribed for shares.

"The level of retail investor support for Virgin Blue shows that Australians believe in our business model and want to be part of this company's ongoing success," Branson said.

Virgin Blue will allocate two-thirds of the IPO to institutional investors with the rest going to retail investors.

The joint global coordinators on the IPO are Goldman Sachs JBWere and CSFB.

At 0440 GMT, Qantas shares were up 2 cents, or 0.6%, at A$3.44, while Patrick shares were up 16 cents, or 1.1%, at A$15.08.

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