North America IPO: Viking’s US$1.77bn IPO
Cruise control Much like one of its scenic longship expeditions down the Danube, Viking Holdings’ US$1.77bn NYSE IPO in early May was smooth sailing all the way.
The second-biggest US IPO of the year secured a higher valuation multiple than its traditional cruise line peers yet went on to deliver impressive aftermarket returns.
Viking neatly balanced the interests of its billionaire Norwegian founder and CEO Torstein Hagen, selling shareholders TPG and Canada Pension Plan Investment Board and the new investors that came on board.
After pricing the primary and secondary sale of 73.6m shares at US$24 each, including a fully exercised greenshoe, Viking shares finished the year at US$44.06, up 83.6% from the offer price.
TPG and CPPIB, which had invested US$700m in Viking during the pandemic in 2021, broke the lockup to return in September to collect another US$1.07bn via a follow-on priced at US$31 per share.
The IPO outcome reflected deft positioning of the company by the syndicate led by Bank of America and JP Morgan. UBS, Wells Fargo, HSBC and Morgan Stanley were additional bookrunners.
By emphasising Viking’s client base of wealthy older travellers, industry-leading growth rates and demand visibility, Viking differentiated itself from listed competitors Royal Caribbean Cruises, Carnival and Norwegian Cruise Line. The syndicate pointed investors to more highly valued travel and leisure names as comps, such as Hilton Worldwide and Hyatt Hotels.
“Becoming a public company in 2024 was a historic moment for us, but it was also a natural move to further solidify our position as a global leader in experiential travel, delivering high-end, culturally enriching experiences under the one Viking brand,” Hagen said.
To help make that case in early investor meetings, Viking docked one of its cruise ships in New York to give 30 to 40 big investors a first-hand look at its operations.
Norway’s sovereign wealth fund, Norges Bank Investment Management, also agreed to invest US$100m in the IPO as a cornerstone. That third-party endorsement helped Viking upsize the base offering twice, from 44m shares at launch to 53m late in the roadshow and to 64m at pricing, in response to heavy oversubscription, achieving the largest base deal upsize on a US IPO since January 2021.
“You had real stability at the top of the shareholder registry with enough unfilled demand to really allow the transaction to season and trade well,” said Keith Canton, JP Morgan’s head of Americas ECM.
The final terms valued Viking at a forward EV/Ebitda multiple of 9.5, a slight premium to Royal Caribbean. The follow-on valued Viking at a multiple of 11, while the stock closed 2024 at more than 13, according to LSEG data.
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