View Full Version : Virgin Blue IPO 10 times oversubscribed

5th Dec 2003, 12:20
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.


5th Dec 2003, 13:43
Theres one born every day.

Never buy airline shares. There are much more stable investments out there, as the mums and dads will find out.

5th Dec 2003, 16:49
It's a matter of timing MoFo, isn't it? Cathay Pacific shares were down to HKD8.40 during the SARS epidemic last March. To-day they closed at HKD14.90. That's 56.3% rise in nine months. It all depends what airline shares you buy.:ok:

5th Dec 2003, 17:25
A good job being CEO. Pay plus a 76.8 million dollar bonus after four years.

Good job!

6th Dec 2003, 00:00
Sat "Melbourne Age"

$5 billion: Virgin float offer swamped
By Scott Rochfort
December 6, 2003

Virgin Blue's public share offer has tapped into growing interest in the sharemarket, with applications of more than $5 billion for only $558 million of stock.

Investors apparently shrugged off any concerns about a threat to Virgin's growth plans and sharemarket float from Qantas's fledgling discount offshoot, JetStar.

Virgin claims its public offer closed more than 10 times oversubscribed and at the top of its price range.

With Virgin Blue set to start trading on the Australian Stock Exchange with $2.3 billion market capitalisation, the two questions lingering yesterday were whether Sir Richard Branson would reduce his 29.1 per cent stake, and what publicity stunt the Virgin founder had in store for Monday's listing ceremony.

Sir Richard hinted that he might well increase the shares available through the float to 29 per cent of Virgin Blue, which would cut his interest to 25.1 per cent, when he paid credit to the "250 institutions worldwide and many thousands of our customers" who applied for shares.

"Although we have been told by our advisers that demand was over 10 times subscribed at the $2.25 price, we have decided not to price the offering any higher to hopefully allow for a decent aftermarket for the many staff and supporters of Virgin Blue," Sir Richard said in a statement.

With the float costing Virgin Blue about $20 million, advisers Goldman Sachs JBWere and Credit Suisse First Boston will get 2.5 per cent of the funds raised plus a 0.5 per cent bonus, worth an estimated $16.7 million.

But aside from Sir Richard, another Virgin Blue shareholder set to wake with a big grin on Monday is the airline's chief executive, Brett Godfrey, whose 34.75 million shares will be worth $78 million.

While Patrick Corp is set to hold its 45 per cent stake in Virgin Blue, the airline added that even if Sir Richard sold down his stake, he "will continue (his) strategic mentoring, advisory and promotional role" with the three-year-old airline.

Amid talk that yet another of Sir Richard's stunts could involve him donning a blonde Afro wig some time on Monday morning, Patrick Corp's less-peacockish managing director and Virgin Blue chairman, Chris Corrigan, continued to avoid comment on his plans for the airline, namely whether he planned to lift his stake.

With Virgin's New Zealand-based carrier, Pacific Blue, set to start its trans-Tasman services between Christchurch and Brisbane in late January, commercial manager David Huttner also shrugged off concerns that the airline was yet to receive operating certificates from New Zealand regulators.

While Pacific Blue is also yet to gain the necessary regulatory approval to fly extended-range twin-engine operations (ETOPS) across the Tasman Sea, Mr Huttner said he was confident the airline would gain the necessary paperwork in January.

He said "there's no question" Virgin's three Pacific Blue 737s would be well utilised here before heading across the Tasman.


Z Force
6th Dec 2003, 10:09
How long ago did Virgin Blue gain ETOP's approval? Any idea why the approval wouldn't just transfer across or is it because it's going to be a new AOC?

7th Dec 2003, 16:59
Sunday December 7, 04:37 PM

Virgin Blue stocks tipped to jump

Shares in Virgin Blue Holdings are expected to take off when it debuts on the Australian Stock exchange on Monday with analysts predicting increases of up to six per cent on its issue price.

After closing more than 10 times oversubscribed, Virgin Blue, owned by Sir Richard Branson's Virgin Group and Australian transport logistics company Patrick Corp, have set the final price for shares in its initial public offering at $2.25 each giving the company a market capitalisation of $2.3 billion.

CommSec senior analyst Craig James said the stock had grabbed investor imagination was expected to debut at a "reasonable premium" before hitting between $2.35 and $2.40 a share during the day.

"A number of floats this year have come on with high expectations which have been somewhat dashed," Mr James said.

"But Virgin has got all the indications of coming on at a reasonable premium to the issue price.

"The float seems to have grabbed the imagination of investors.

"Virgin is one of the most efficient budget airlines in the world with a very good reputation amongst the travelling public in Australia and investors want to be part of the story."

Mr James said strong support from staff - Virgin have said 94 per cent of staff responded to the initial public offer - showed their confidence in the carrier and boded well for Virgin's long term success.

"We believe Virgin will remain a very competitive threat to Qantas even when the Qantas discount carrier comes on next year," he said.

Virgin Blue said despite the massive oversubscription, staff would receive 100 per cent of shares requested.

Virgin Blue email subscribers and valued customers would receive the minimum $5,000 of shares and 50 per cent of any shares applied for after that.

General public would receive the $5,000 minimum application and 25 per cent of all extra shares requested, a spokeswoman for the carrier said.

A percentage break down of the shareholding will be released before the stock goes on the market at noon on Monday, she said.

Sir Richard, who was considering selling down his stake in the carrier to between 29.1 and 25.1 per cent, has opted over the weekend to keep just 25.1 per cent, in response to requests from institutions for greater liquidity in the stock.

This would raise Virgin's equity to more than $600 million and help the carrier take on Qantas' low-cost offshoot Jet Star, due to take to the skies in May next year.

Sir Richard, who provided the seed capital of $10 million to help found the airline three years ago, has already had to sell down his stake in the airline to allow for the float, because of Patrick's insistence on maintaining a 45 per cent threshold.

Sir Richard, who has been appointed life president of Virgin Blue but will not sit on the board, said the company had kept the share price within the indicative range to promote trading after the float.


Sun "The Guardian" London

Branson fills his war chest

Heather Tomlinson
Saturday December 6, 2003
The Guardian

Sir Richard Branson is to net A$300m (128m) from the imminent flotation of Virgin Blue, his low-cost Australian airline.
A spokesman said the

entrepreneur had admitted that he was sitting on a "war chest of cash" that he would use to expand his other businesses and for acquisitions, possibly in the UK.

Yesterday Virgin Blue said the flotation would be set at the highest share price in the range, A$2.25, valuing the company at A$2.3bn. It said that demand was 10 times the number of shares on offer. The shares will start trading on the Australian Stock Exchange on Monday.

It was initially unclear exactly how many of his shares Sir Richard would sell. However, Will Whitehorn, the entrepreneur's official spokesman, said his boss would sell down his 46% stake to 25.1%, and the net proceeds would be A$300m. He added that Sir Richard's investment had been A$10m since it was set up in August 2000.

Virgin Blue is also raising A$400m to fund expansion into New Zealand and the South Pacific rim.

Sir Richard previously sold half of the business to Australian transport group Patrick Corp and netted A$520m. He will also receive millions of pounds in royalty payments from the airline for the right to use the Virgin brand.

Mr Whitehorn said the cash pile would be used to expand Virgin Mobile in the US and into Canada, as well as launching a low-cost airline in the US in the second half of next year. He is considering acquisitions in transport and financial services and is also looking at setting up radio stations in Japan and Australia.

"One of the intentions is to maintain a war chest to take advantage of opportunities," said Mr Whitehorn. "He is sitting on quite a war chest of money at the moment. He is in quite a strong position, probably one of the strongest he has ever been in his working history."

He would not specify the amount of cash, only that it was "hundreds of millions".

Virgin Blue has been battering Australian flag carrier Qantas on its home turf and now says it has 30% of the domestic market. It underlines the success of low-cost, no-frills airlines when pitted against the traditional airlines.


Skyhawk XP
23rd Dec 2003, 09:41
Some people in the financial industry are saying Virgin Blue was overpriced and are sceptical the issue was genuinely oversubscribed 10 times as there is little evidence in the current trading market.

The latest edition of Your Money Weekly is negative on DJ and says they would come off second best in a price war with QF due to their financial strength.

The article goes on to say that even Qantas Holidays makes almost half the profit DJ is making without any high risk capital intensive investment.

Finally a warning is issued for conservative or long-term investors.

There is talk we will see airfares as low as $29 next winter when Jetstar starts to muscle in on Virgin Blue. The trans tasman could also be a battlefield with Freedom taking on Virgin Pacific.

"Fasten your belts"