F-1/A: Viking Holdings Ltd Files for IPO, Aiming to Raise $1 Billion for Cruise Expansion

Viking Holdings Ltd, a leading cruise line, has filed for an IPO to raise capital for fleet expansion and general corporate purposes.

Summary

• Viking Holdings Ltd has filed an amendment to its F-1 registration statement for an IPO.
• The company plans to offer 11,000,000 ordinary shares, while selling shareholders will offer 33,000,000 ordinary shares.
• The anticipated IPO price is between $21.00 and $25.00 per share.
• Viking has applied to list its ordinary shares on the New York Stock Exchange (NYSE) under the symbol VIK.
• Norges Bank Investment Management has indicated an interest in purchasing up to $100 million in ordinary shares in this offering at the initial public offering price.
• The company will use a portion of the net proceeds from this offering to satisfy tax withholding and remittance obligations related to the RSU Net Settlement.
• The remaining net proceeds from this offering will be used for general corporate purposes, including working capital, operating expenses and capital expenditures.
• The company may also use a portion of the net proceeds to make acquisitions or investments, although it does not have agreements or commitments for any material acquisitions or investments at this time.

Sentiment

Score: 6

Explanation: While the company has strong brand recognition and growth potential, the high debt and recent net loss temper the overall sentiment.

Positives

• The company has a strong brand reputation, being rated #1 for Rivers, Oceans, and Expeditions by Condé Nast Traveler.
• Viking has a clear customer focus on the affluent, English-speaking travelers aged 55 and over.
• The company has a data-driven marketing platform that drives demand and significant direct bookings.
• Viking has a young fleet with innovative design that drives efficiency and profitability.
• The company has a fuel-efficient fleet designed to meet future environmental regulations.

Negatives

• The company reported a net loss of $1,858.6 million for the year ended December 31, 2023.
• The company is highly leveraged, with $5.4 billion of Total Debt as of December 31, 2023.
• The company is a controlled company under the NYSE rules, which may reduce shareholder protections.
• The company has identified material weaknesses in its internal control over financial reporting.

Risks

• Changes in the general worldwide economic and political environment could reduce the demand for cruises.
• Adverse weather conditions or other natural disasters, including high or low river water levels, may require the company to alter its itineraries or cancel existing cruises.
• Adverse incidents involving cruise ships may adversely affect the company's business, financial condition and results of operations.
• Disease outbreaks or pandemics have had, and in the future could have, a significant impact on the travel industry generally and on the company's business and results of operations.
• The threat of terrorist attacks, wars, acts of piracy and other events affecting the safety and security of travel can reduce the demand for cruises or require the company to cancel existing bookings.
• Changes in fuel prices would affect the cost of the company's cruise ship operations and its hedging strategies may not protect it from increased costs related to fuel prices.
• Increased labor costs or the company's inability to recruit or retain employees may adversely affect its business, financial condition and results of operations.
• Increases in inflation could adversely affect the company's business, financial condition and results of operations.
• Fluctuations in foreign currency exchange rates could affect the company's financial results.
• An increase in cruise capacity without a corresponding increase in demand and infrastructure could adversely affect the company's business, financial condition and results of operations.
• The company's success is substantially dependent on the continued service of its senior management.
• The company's expansion into new products may be unsuccessful.
• Conducting business internationally may result in increased costs and risks.
• If the company experiences delays in ship construction or ship repairs, maintenance or refurbishments or changes in costs, its business, financial condition and results of operations could be adversely affected.
• Lack of continuing availability of attractive, convenient and safe port destinations could adversely affect the company's business, financial condition and results of operations.
• The company relies on travel agencies to generate a material portion of its sales.
• Reductions in the availability of and increases in the prices for the services and products provided by the company's vendors could adversely affect its business and revenues.
• The company relies on scheduled commercial airline services to transport its guests to or from the cities where its cruises embark and disembark.
• Credit card processing terms and requirements, adverse changes in guest payment policies, and consumer protection legislation or regulations could negatively affect the company's financial condition.
• The Viking name and brand are integral to the success of the company's business.
• Breaches in data security or other disturbances to the company's information technology systems and networks and operations could adversely affect its business, financial condition and results of operations.
• The company is highly leveraged and may not be able to generate sufficient cash to service all of its indebtedness or to obtain additional financing if necessary.
• The company is subject to complex laws and regulations, including environmental laws and regulations.
• Amendments to existing tax laws, rules or regulations or enactment of new unfavorable tax laws, rules or regulations could have an adverse effect on the company's business and financial performance.

Future Outlook

The company believes it is well-positioned for future growth and plans to expand its fleet to address unmet demand.

Management Comments

• Torstein Hagen, Founder, Chairman and CEO: 'We view going public as a natural move to further solidify our position as a great company.'
• Torstein Hagen, Founder, Chairman and CEO: 'Becoming a public company will increase our financial flexibility and may help us realize future opportunities.'

Industry Context

The cruise industry is highly competitive, with Viking competing against other cruise lines and land-based vacation alternatives. The luxury segment, in which Viking operates, is expected to see significant growth.

Comparison to Industry Standards

• Viking's North American outbound river market share was 51% for the 2023 season, significantly higher than its competitors.
• Viking's luxury ocean market share was 26% for the 2023 season.
• Viking's Antarctic expedition market share was 12% for the 2023 season.
• Viking's Mississippi river market share was 20% for the 2023 season.
• Viking's total revenue per passenger was $7,251 for the year ended December 31, 2023.
• Viking's ROIC was 27.5% for the year ended December 31, 2023.
• Viking's average age for its fleet available for operations was 6.5 years as of December 31, 2023, which is younger than the average age for the large public cruise lines.

Related Party Transactions

• The company provides certain finance, accounting and management services to its principal shareholder and its affiliates.
• In February 2021, the company issued 184,267,200 Series C Preference Shares to its financial shareholders.
• In February 2021, in connection with the issuance of Series C Preference Shares to its financial shareholders, the company issued two warrants to its principal shareholder to purchase up to an aggregate of 8,733,400 ordinary shares at an exercise purchase price of $0.01 per ordinary share.

Stakeholder Impact

• Shareholders will see their ownership diluted by the issuance of new shares.
• Employees may benefit from the equity incentive plans.
• Customers should expect continued high-quality cruise experiences.
• Suppliers may see increased business as the company expands its fleet.

Next Steps

• The company will proceed with the IPO process, including pricing and allocation of shares.
• The company expects to list its ordinary shares on the NYSE under the symbol VIK.
• The company will enter into a $375 million secured revolving credit facility following the completion of this offering.

Key Dates

Keywords

IPO, cruise line, Viking Holdings, ordinary shares, financial results, travel, cruise, ocean, river, expedition