Three frontrunners have emerged in the race to buy Virgin Australia.
Before Friday’s deadline for non-binding initial offers, investment firms Brookfield, BGH Capital and Bain Capital have emerged as the favourite parties to lead consortiums that buy the beleaguered airline.
The Australian Financial Review said there was an outside chance that iron ore magnate Andrew ‘Twiggy’ Forrest, or the state governments of Victoria, New South Wales and Queensland could lead a potential fourth group of bidders.
And the Queensland government has since announced plans to bid for the airline, with new state Treasurer Cameron Dick describing the government as “a serious contender” that had made good progress in discussions with the administrators.
Sources close to the bidding process told the AFR the fourth contender would join forces with one of the other consortiums if its bid fell through, with the “serious number crunching and bidding” expected to get under way next week.
Deloitte lead administrator Vaughan Strawbridge is keen to secure a new owner for Virgin by June 30.
But who exactly are the firms circling overhead?
Brookfield is a Canadian assets manager with deep pockets and prior knowledge of Australia’s transportation sector.
The company already owns ports and coal export terminals across the country, as well as private hospital operator Healthscope, international construction group Multiplex, and commercial real estate such as Brookfield Place in Perth.
Further afield, it owns the Canary Wharf skyscraper in London and a smattering of other iconic properties across Europe and North America.
Early reports suggested Brookfield was initially working with Macquarie Bank on a prospective bid for Virgin Australia, before the investment bank walked away from the partnership.
In total, Brookfield owns $500 billion worth of assets across 30 countries and five continents.
“Our reputation is that if you have a large transaction, if you have a difficult transaction . . . go to Brookfield,” chief executive Bruce Flatt told the UK’s Financial Times.
Bain Capital is the private equity arm of global consultancy group Bain & Company.
The New Daily understands the firm is a serious contender in the race to buy Virgin and will submit a non-binding initial proposal to Deloitte on Friday.
Bain has hired old hands KordaMentha and former Jetstar CEO Jayne Hrdlicka to strengthen its bid.
Ms Hrdlicka was Jetstar’s CEO from 2012 until 2018 and has also enjoyed stints at Qantas and Bain & Company, while KordaMentha was established by Mark Korda and Mark Mentha, the two liquidators who earned millions of dollars overseeing Ansett’s collapse nearly 20 years ago.
Bain has runs on the board when it comes to restructuring airlines.
It played an integral role in turning around struggling US airlines such as Northwest, Atlas Air and United.
Beginning in 1984, it has roughly US$105 billion ($162.2 billion) in assets under management, has actively invested in Australia for more than 20 years, and manages money for superannuation funds such as CareSuper, REST and EISS Super.
BGH Capital is a Melbourne-based private equity firm owned and managed by founders Robin Bishop, Ben Gray and Simon Harle.
In 2006, it launched a failed takeover bid for Qantas.
Last year, it bought university pathways courses provider Navitas for $2.3 billion with the help of superannuation fund AustralianSuper, which is also expected to back BGH’s tilt for Virgin.
Melbourne law firm Arnold Bloch Leibler is advising BGH on the deal, according to the AFR.
In light of the Treasurer’s decision to impose more stringent controls on foreign takeovers, BGH hopes its Australian roots give it a competitive edge over its rivals.
The firm started negotiating with Virgin weeks before the airline went into voluntary administration, but was unable to strike a deal at the time.
Now, there are 19 potential bidders, according to an affidavit Deloitte filed to the federal Court on Tuesday.
Meanwhile, regional carrier Regional Express (Rex) is considering expanding its operations to include capital city services, and Treasurer Josh Frydenberg has ruled out a federal government bid for Virgin.