Virgin's Velocity Frequent Flyer Program Is Now Worth At Least $960 Million After A Part Sale

Sir Richard Branson and Virgin Australia CEO John Borghetti Photo: Getty

Fund manager Affinity Equity Partners has bought a 35% minority stake in Virgin’s Velocity Frequent Flyer, valuing the program at $960 million.

Velocity Frequent Flyer will remain under the Virgin Australia Group banner, with the introduction of a separate Velocity Frequent Flyer Board to work closely with the Velocity management team.

Virgin Australia will maintain a majority stake in Velocity Frequent Flyer and majority representation on the board, including the appointment of a chair and 65% of voting rights.

CEO John Borghetti says the loyalty business has doubled membership numbers to 4.5 million in the last four years.

“The program remains a key value driver for the Virgin Australia Group and through access to additional capital and resources, this transaction will allow us to accelerate the program’s strategy and realise its full potential as a world class loyalty business,” he says.

“Affinity brings a wealth of experience in driving rapid and sustainable growth across a diverse range of businesses and we look forward to working with them to enhance value.”

Brett Sutton, Affinity Equity Partners Head of Australia and New Zealand, says Velocity embodies all of the key traits the company looks for in an investment: a solid base business, strong management and significant growth prospects.

“Through this investment together with Virgin Australia we hope to rapidly grow the program and drive further value in return,” he says.

In 2015, Velocity Frequent Flyer will enter its tenth year in the Australian market.

The transaction is expected to increase Virgin Australia’s cash balance by $336 million.

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