I don't really get why VA agreed to this deal. It doesn't really seem as though they will benefit from it.
Its not VA agreeing to the deal - its the owner, Bain. And Bain benefits to the tune of a
reported $1 billion, not bad considering what they paid for it (incl assumed debt) plus other operational returns since.
Another benefit for Bain from the QR deal is that it places a value on the VA enterprise value (or, say, 'shares', if you like). Now they can go to other investors or even the public markets and say - "See, this world class airline thinks we are worth X, its not just a number that we dreamed up. So pay up with confidence."
Does the government need to approve any increase in a stake?
I’m not completely over the make up of it but aren’t VAi and Domestic already set up different and therefore different ownership laws apply. Could QR for instance purchase more of the domestic side of things?
There have been a couple of good stories in the AFR over the past few days on things like that. Much better informed that many comments here (incl mine
)!!
Wasn't the concern (and why QR opted for 25%) that if they had too big of a controlling stake, they government might look to block the deal?
It was (almost) 100% foreign owned at Jan 1 and after the QR deal it'll still be (almost) 100% foreign owned. If QR take a further stake, up to, say, 49%, it will still be (almost) 100% foreign owned EXCEPT that much more of it will be owned by an entity that knows how to run airlines very well, as opposed to a Private Equity mob who are just after a maximised return (and good on 'em).
Any government or regulator should welcome the increasing influence of the 'airline' entity as it is motivated to grow and keep the VA flying and profitable, as opposed to the Private Equity mob who have already made a tremendous return and could metaphorically walk away and let the whole thing sink and not think twice, except that they may have left something on the table.
While its been said that the QR purchase monies go to Bain and not VA, while this is true, I think a lot of it will go to VA via intercompany loans. Parent companies
lurve intercompany loans. QR may have even put it as a condition of purchase.
Another thing for peeps here to think about is that its not just Qatari QR talking to and buying into Bain controlled VA. Both sides have swarms of investment bankers who have been wheeling and dealing with each other for a long time and would have 'war gamed' every scenario imaginable, for both sides (and some other ones). The IPO scenario would have been constantly updated and no doubt there is a draft offering document fed by linked spreadsheets so it can be populated almost 'live'.
The capital market in Australia has improved greatly over FY23/24 and Qantas (the main proxy for aviation capital appetite here) especially has been strong. Trump of course the new wildcard!
As for IPO, one of the concerns would be the mix of insto investors Vs individuals (AKA mum & dads) and the shape of the secondary market - which is one of the main purposes of the so-called 'roadshows'. Basically brokers will be chosen for IPO allocations based on how much they will shove the stock to their client base
and keep it sticky to support the secondary market.
Try and get old of the AFR over this week - there are some good stories on VA/QR in it.
