Australia's Virgin Blue has closed its initial public offering (IPO) more than 10 times oversubscribed, and the final price set for the share sale values the airline at A$2.3 billion ($1.7 billion).

The low-fare carrier's shares are due to begin trading on the Australian Stock Exchange on 8 December. Shares were priced at A$2.25, and the policy used for allocation means there will be a split of around two-thirds institutional shareholders to one-third retail shareholders.

What has yet to be determined is what percentage of the company will be on a so-called "free float". A spokeswoman says from Sydney that the Virgin Group has yet to decide whether it will exercise an option to sell more shares than originally anticipated.

The spokeswoman adds that if the Virgin Group sells down "to the full extent", the total free float will be 29%.

It will also leave the Virgin Group with 25.1% of the company, rather than 29.1% if it chooses not to sell more shares.

"They'll make that decision over the next day or so," she says.

She also says that if the Virgin Group sells to down to the full extent, A$666 million worth of new and existing shares will have been sold, based on the A$2.25 price.

The Virgin Group launched Virgin Blue in 2000 and it is now the second-largest airline in Australia after Qantas Airways.

Early last year the UK company sold 50% of Virgin Blue to Australian transport firm Patrick Corp, which after the flotation will retain 45%.

Virgin Blue chief executive Brett Godfrey says in a statement that the successful IPO has "left the company well capitalised to fund its growth over the medium to long term".

"Virgin Blue has achieved outstanding growth since the commencement of operations back in August 2000 and we now have sufficient cash to not only meet our objectives going forward, but also to continue to lead the low-cost, low-fare airline industry in Australia."

Source: Flight Daily News