Private equity giant KKR is in talks to take a significant stake in online travel agent Webjet and provide it with funds to survive the coronavirus pandemic.
It is understood KKR lobbed a "PIPE-style" proposal to the Australian company late last week, offering to provide a near-term financial lifeline in return for a non-controlling equity stake.
It is not known what conditions were attached to KKR's proposal, however sources said it was relatively advanced and was designed to provide Webjet funding almost immediately.
Webjet's board was considering the proposal over the weekend as it tries to navigate a near shutdown in the domestic and global tourism industries.
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Interestingly, KKR's interest comes after it had earlier been assessing an offer for the whole group. The private equity player had UBS investment bankers run diligence and put together a funding package, before the virus hit and ended any chance of a binding takeover bid.
While the nature of KKR's interest has changed, the preparatory work meant it was in a good position to lob its PIPE proposal last week. UBS is believed to remain involved.
The situation is an important litmus test for corporate Australia and capital markets more generally, as distressed companies try to work out how to survive.
Australian companies have historically been reluctant to offer non-controlling stakes to private equity firms, despite PIPE (private investment in public equity) deals being commonplace in the United States. Instead, Australian companies have been able to lean on the big institutional investor community for bailouts.
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