Meet Cyrus, who wants to own Virgin through the virus and beyond

Every good auction needs a smokie.

For the past decade, sell-side bankers have spruiked the mysterious and mostly meaningless "Chinese private equity" bid, in an effort to keep the trade and strategic tyrekickers honest and local private equity types focused.

Street Talk can recall only one occasion when the mysterious Chinese private equity bid emerged triumphant. That was Beijing Capital's $NZ950 million offer for Cleanaway's New Zealand arm in 2014, and was enough to ensure sell-side bankers could spruik Chinese private equity as the fourth bidder in an auction forever more.

At Virgin Australia, there's well known private equity shops Bain Capital and BGH Capital.

Then there's Indigo Partners, which has teamed up with Oaktree Capital Management, and has airline investments in a few parts of the world.

The genuine smokie is Cyrus Capital Partners, which got through the auction's first stage relatively unnoticed, before we outed them on the shortlist.

Since then, there's been plenty about what Cyrus has done in the past, including its track record investing in and around Virgin-related airlines offshore. But there's little known about whether it's a serious contender for Virgin Australia, or who is involved in its bid.

Until now.

As bidders progress through the second stage dataroom and go back to Virgin management for follow-up presentations, Street Talk has found out a bit more about the Cyrus bid.

It is understood Cyrus has told administrator Deloitte (and its bankers at Morgan Stanley and Houlihan Lokey) that its bid is spearheaded by four leading men.

The first is Cyrus founder and managing partner Stephen Freidheim who, as Chanticleer pointed out one week ago, is a member of Wall Street’s elite. He is prominent philanthropist, sits on boards including influential New York think tank the Council on Foreign Relations, the US Olympic and Paralympic Foundation and his alma mater Yale, and created Och-Ziff's distressed debt arm.

He's joined by fellow Cyrus partner John Rapaport, who is also chief investment officer at Keyframe Capital Partners. Rapaport and a couple of others set up Keyframe in January to focus on investments in the transport, energy and fintech sectors, and how they're being disrupted. Rapaport was also a director of Virgin America for eight years and previously worked for Bain Capital's credit arm Sankaty Advisors (now called Bain Capital Credit, and involved in the wider Bain bid for Virgin).

The third spearhead is Jonathan Peachey, who is a senior adviser to Cyrus Capital focusing on the airlines sector, and was formerly CEO of Virgin Group North America. Peachey was involved in Connect Airways - the consortium of Cyrus, Virgin Atlantic and Stobart Group that acquired European regional airline Flybe.

And the fourth is Cyrus' lawyer; Chris Ahern of US law firm Jones Day. Ahern is based in Sydney and works across Jones Day's M&A and technology practices, and is the firm's partner in charge for Australia and Japan. He acted for Lucent in One.Tel's collapse, and more recently advised First Data Corporation when it was sold to KKR for $22 billion.

It remains to be seen whether Cyrus will end up owning Virgin Australia, or go as far in the auction as the other three bidders Bain, BGH and Indigo/Oaktree. For now, though, the smokie is sending all the right signals that it is a serious contender.