Bain Capital is actively seeking new airline investment opportunities after a highly profitable venture with Virgin Australia Holdings. The US buyout firm recently sold a 30 per cent stake in Virgin Australia, the country’s second-largest airline, through a $685 million initial public offering last month. This sale has boosted Bain’s return on investment to approximately 3.5 times its initial purchase price at the onset of the pandemic.
Currently, Bain Capital retains nearly 40 per cent ownership of Virgin Australia, a stake valued at around $1 billion. Selling this remaining stake at the current valuation could potentially increase the payout multiple to five. According to Mike Murphy, the Sydney-based partner who spearheaded the Virgin Australia acquisition, the success of this deal has reshaped Bain’s perception of aviation investments.
Virgin Australia is the second-largest airline in Australia. Bain Capital initially acquired Virgin Australia after it fell into administration during the COVID-19 pandemic, and specialises in private equity, credit, venture capital, and real estate investments. Bain Capital’s successful turnaround of a distressed airline during a global health crisis has cultivated a wealth of expertise within the firm. Murphy noted that the firm is open to exploring airline deals in different regions and contexts, mentioning that they have already assessed potential opportunities in India.
While airline acquisitions are infrequent, and private equity buyouts even rarer, Bain Capital’s willingness to pursue additional deals highlights the potential for untapped value within struggling airlines. Murphy indicated that Bain Capital is eligible to sell its remaining Virgin Australia shares starting in mid-2025, with a complete exit potentially occurring as early as 2027. He continues to serve on the airline’s board.
