F-1: Viking Holdings Ltd. Announces Secondary Offering of Ordinary Shares

Existing shareholders of Viking Holdings Ltd. are offering 30,000,000 ordinary shares, with an underwriter option for an additional 4,500,000 shares, in a secondary offering where the company will not receive any proceeds.

Summary

• Viking Holdings Ltd., a leading travel company offering river, ocean, and expedition cruises, has announced a secondary offering of 30,000,000 ordinary shares by existing shareholders.
• The underwriters have a 30-day option to purchase up to 4,500,000 additional ordinary shares from the selling shareholders.
• The company will not receive any proceeds from this offering.
• Viking Holdings Ltd. ordinary shares are listed on the NYSE under the symbol 'VIK'.
• As of September 6, 2024, the last reported share price was $32.39.
• The company's principal shareholder holds approximately 87% of the voting power due to ownership of special shares.
• Each special share carries 10 votes and converts to one ordinary share upon transfer, with some exceptions.
• For the year ended December 31, 2023, Viking Holdings Ltd. served nearly 650,000 guests and generated $4.7 billion in revenue.
• The company reported a net loss of $1.9 billion and Adjusted EBITDA of $1.1 billion for the same period.
• For the six months ended June 30, 2024, the company served over 290,000 guests, generating $2.3 billion in revenue, a net loss of $338 million, and Adjusted EBITDA of $488 million.
• The company has a young fleet with an average age of 7 years and has ordered 25 new ships for delivery through 2029.
• The company's growth strategy includes fleet expansion, increasing guests from outside North America, expanding in China, and potentially developing land-based products.

Sentiment

Score: 7

Explanation: The secondary offering allows existing shareholders to liquidate some of their holdings, which could be perceived as a positive sign. The company's strong brand, growth strategy, and large orderbook suggest a positive outlook. However, the net losses and high debt levels temper the overall sentiment.

Positives

• Strong brand recognition and high guest satisfaction ratings across river, ocean, and expedition cruises.
• Rapid growth in guest numbers, revenue, and Adjusted EBITDA from 2015 to 2023.
• Market leader in river cruising and luxury ocean cruising with significant market share.
• Young and fuel-efficient fleet designed to meet future environmental regulations.
• Experienced management team with a proven track record of success.
• Strong direct marketing and multiple distribution channels optimizing yields.
• High levels of early bookings and advance bookings providing revenue visibility.
• Disciplined growth strategy focused on fleet expansion and new itineraries.

Negatives

• Reported net losses in 2023 and the first half of 2024.
• Significant level of debt, potentially limiting financial flexibility.
• Business operations are susceptible to external factors like economic downturns, geopolitical events, and adverse weather conditions.
• Reliance on third-party vendors for certain services and supplies.
• Potential challenges in managing rapid growth and expanding into new markets.
• Concentration of voting power with the principal shareholder, potentially limiting influence of other investors.

Risks

• Changes in the global economic and political environment could reduce demand for cruises.
• Adverse weather, natural disasters, and high or low river water levels could disrupt or cancel cruises.
• Negative incidents involving cruise ships could damage the company's reputation and affect demand.
• Disease outbreaks or pandemics could significantly impact the travel industry and the company's operations.
• Terrorist attacks, wars, and piracy could reduce demand or necessitate cancellations.
• Fluctuations in fuel prices and currency exchange rates could impact financial results.
• Increased labor costs and difficulty in recruiting and retaining employees could affect operations.
• Increased competition and overcapacity in the cruise industry could pressure pricing and yields.
• Dependence on the continued service of senior management.
• Potential difficulties in expanding into new markets and products.
• Delays or increased costs in ship construction or repairs could negatively impact operations.
• Dependence on travel agencies for a significant portion of sales.
• Potential disruptions in commercial airline services affecting guest transportation.
• Cybersecurity breaches and data security risks could disrupt operations and lead to financial losses.
• Compliance with complex and evolving environmental and other regulations could increase costs.

Future Outlook

The company expects continued growth driven by fleet expansion, new itineraries, and increased penetration in existing and new markets. They plan to increase guests from outside North America and continue expanding Viking China. They also see potential in developing land-based products.

Industry Context

The global luxury leisure travel market is experiencing growth, projected to reach $1.9 trillion by 2028. Within this market, the cruising and yachting industry is one of the fastest-growing segments. The luxury ocean cruise market is expected to grow significantly, with Viking Holdings Ltd. well-positioned to capture this growth due to its focus on the underserved 55+ demographic and its large orderbook of new ships.

Comparison to Industry Standards

• Viking Holdings Ltd. is the only pure-play luxury public cruise line, unlike larger competitors with multiple brands across different cruise categories.
• Their revenue per passenger is significantly higher than the industry average, reflecting their focus on the luxury market.
• They have a younger fleet than the large public cruise lines, leading to higher yields and lower maintenance costs.
• Their contracted capacity represents approximately 37% of the new supply coming online in the luxury ocean market by 2029, positioning them favorably for growth.

Related Party Transactions

• The company provides management services to its principal shareholder and affiliates for a fee.
• The company issued Series C Preference Shares to financial shareholders in 2021 and warrants to its principal shareholder.
• The company has an investor rights agreement with its principal and financial shareholders, granting board designation and registration rights.
• The company sold the Viking Sun to a related party, CMV, in 2021 and provides services to CMV.

Stakeholder Impact

• Shareholders may experience dilution of ownership if the underwriters exercise their option to purchase additional shares.
• The secondary offering could lead to increased trading volume and liquidity for the company's ordinary shares.
• The company's growth strategy, including fleet expansion and new itineraries, could benefit employees through job creation and career development opportunities.
• Guests will have access to a wider range of cruise options and destinations as the company expands its fleet and offerings.
• The company's focus on environmental responsibility could positively impact communities and the environment in the destinations it visits.

Next Steps

• Delivery of ordinary shares is expected on or about a date to be determined in 2024.
• The underwriters have a 30-day option to purchase up to 4,500,000 additional ordinary shares.
• The company plans to continue expanding its fleet with new river and ocean ships.

Key Dates

Keywords

cruise, river cruise, ocean cruise, expedition cruise, luxury travel, travel company, Viking, NYSE, VIK, secondary offering, shipbuilding, China, Mississippi River, Antarctica