How to invest in the Virgin Australia IPO (and should you)?
It may be Australia's most anticipated IPO this year, but not all investors will get the chance to participate and many will be wary.
Virgin Australia is about to go public (again) on the ASX, but if you're interested in buying in you'll have to act fast.
After exiting the ASX back in 2020 due to voluntary administration, the airliner is back and readying to list under its old ticker VAH, though after its previous fall saw retail investors short changed, many will be wary of stepping back in.
It's aiming to raise around $685 million with shares going at an offer price of $2.90 each. If all goes to plan, the shares will start trading on 26 June 2025.
Here's the key info:
- Offer price: $2.90
- Dividend: No
- Expected listing: 26 June
- Retail offer: 16 June - 19 June
- Lead brokers: Barrenjoey Markets, Goldman Sachs, UBS
How to invest in the VAH IPO
If you want to buy pre-IPO shares in Virgin Australia (before they list on the ASX) you'll need to place your order before the retail offer closes on June 19.
There is no public offer, which means investors can't purchase shares directly from Virgin Australia, instead they'll need to go through a "participating broker".
Unfortunately, there's no public list of online brokers participating in the IPO, but major trading platforms like Bell Direct, CommSec and CMC Invest regularly offer ASX IPOs to customers.
If you're a customer of one of these brokers, you might have already received an invite to participate. If not, it pays to reach out to your broker or share trading platform directly to find out if you can.
You'll need a minimum $2,000 investment to participate.
Ok, but should you invest?
Given the company's previous collapse into administration, investors will understandably be hesitant.
According to Virgin Australia, it has simplified its operations under Bain Capital, focusing on core domestic and short-haul international flights.
The numbers seem to show the strategy has paid off. Virgin Australia returned to profitability in 2023 for the first time in more than a decade, it posted an EBIT (underlying earnings before interest and tax) of $519 million for FY2024, an increase of 18% YOY.
But some analysts have urged caution.
Morningstar analyst Angus Hewitt thinks the IPO is overvalued, estimating a fair value of $2.60, considering the current market conditions.
Moomoo's Michael McCarthy is also wary.
"There are plenty of reasons not to invest in Virgin’s IPO," McCarthy told Finder. "Industry dynamics, rising oil prices, valuation questions and the lack of company earnings guidance."
"However given the share market strength of well-known consumer brands, retail investors may disregard the boring numbers and simply buy an airline brand they know and like."
While Virgin Australia’s return to the ASX may be appealing, particularly to loyal customers and brand-aware investors, it’s important to weigh the risks.
The airline industry is highly volatile, with profitability often at the mercy of fuel prices, economic shifts and operational disruptions. And Virgin has a history of financial instability, and while its turnaround appears promising, this IPO is primarily a sell-down by existing owners, not a capital raise for the business itself.
As always, consider seeking professional advice before making investment decisions.
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