Affinity, which acquired its 35 per cent stake in Velocity in 2014, is keen to exit in full provided it can get a deal at the right price and terms. It is a private equity firm and typically seeks to invest in companies for three-to-five years.
Sources said Affinity’s team had had its own bilateral discussions with potential buyers, including strategic players and infrastructure investors.
Virgin Australia, which has a longer-term interest in its rewards program provider, starts the process as an interested onlooker. Industry sources said it wants to keep control of its frequent flyer program, given Velocity’s importance to the wider business.
UBS is on board to make sure that if Affinity does sell, it is to the right partner – although the role could end up being wider, depending on the transaction structure.
Velocity Frequent Flyer is expected to be valued at 15 to 20-times earnings, although interested parties said much of the value was tied up in contracts written to the company’s chief referrer, Virgin Australia.
The business reported $208.9 million revenue and $63.8 million EBITDA in the six months to December 31.