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(Adds reports on listing size in paragraph 5)
By Scott Murdoch
SYDNEY, Feb 16 (Reuters) - Bain Capital has appointed lead managers for a potential initial public offering (IPO) of Virgin Australia, a source with direct knowledge of the matter said, setting the stage for the country's biggest listing since 2021.
Goldman Sachs, UBS and Barrenjoey received the mandate from the U.S. private equity group that owns Australia's second-biggest airline, said the source, who was not authorised to speak publicly.
Bain said in January it would explore re-listing Virgin, which it bought for A$3.5 billion ($2.45 billion) including liabilities in 2020 after it was placed in voluntary administration, the closest Australian equivalent to Chapter 11 bankruptcy.
Bain, Virgin and the banks declined to comment on the IPO appointments.
The exact size of the listing is yet to be determined, but local media reported it could reach A$1 billion, making it the largest share sale in Australia since investment firm GQG Partners raised A$1.18 billion in October 2021.
There were just $614.2 million of IPOs in Australia in 2022, down nearly 93% from $8.4 billion a year earlier, Refinitiv data showed.
The Australian Financial Review reported the airline, a rival to Qantas Airways Ltd in the domestic market, was expected to seek an equity valuation of at least A$3 billion upon listing. Bain said last month its intention would be to retain a significant stake if an IPO went ahead.
The IPO will be a test for Australia's financial market and the aviation sector, which has improved substantially since then state and international borders reopened after long closures during the pandemic.
Virgin had reported seven consecutive annual losses even before COVID-19 decimated travel globally.
Qantas is poised to post a first-half underlying profit of A$1.35 billion to A$1.45 billion on Feb. 23, a sharp turnaround from the prior year's underlying loss before tax of A$1.28 billion. ($1 = 1.4470 Australian dollars) (Reporting by Scott Murdoch in Sydney; writing by Praveen Menon; Editing by Tom Hogue and Jamie Freed)