Fortress Investment-backed Virgin Trains USA has postponed its Nasdaq IPO ahead of pricing tonight and will look at other options to finance its intercity rail projects.
Multiple sources confirmed this afternoon that the IPO, which had been seeking to raise more than US$500m, would not proceed as planned.
Virgin Trains, recently rebranded after a deal with Sir Richard Branson’s Virgin Group, had fielded investor demand below the US$17-$19 range marketed on the 28.3m-share offering.
Investors were told yesterday that there was demand around the US$12 level and Fortress would support the deal with a US$100m investment, but they remained reluctant to support the deal.
Barclays, JP Morgan and Morgan Stanley were joint bookrunners on the offering.
Though Fortress’s preference was to take the company public, it will now look at other financing options, the sources said.
Virgin Trains operates a recently built passenger rail line from Miami to West Palm Beach.
The IPO would have helped fund an extension to Orlando. The company also planned to raise US$2.3bn of debt after the IPO.
The company also plans to extend the line to Tampa Bay and is separately looking to build a rail link between Las Vegas and the outskirts of Los Angeles.
Investors were unwilling to take on the construction and “ramp-up” risk despite projections the company would earn 70% Ebitda margins on US$1.7bn of “stabilized” revenue in 2023 or 2024.