Nigerian institutional investors have snapped up a majority 51 percent equity stake worth USD$26 million in Nigeria's new national carrier, part-owned by Britain's Virgin Group, the airline said on Tuesday.

The new company, Virgin Nigeria Airlines, is due to begin operations later this year and replaces Nigeria's former flagship carrier, state-owned Nigeria Airways, which was liquidated in 2003 with debts of USD$60 million.

Virgin Nigeria's chief executive Simon Harford said in a statement the investor base of the new company was now in place after the private placement.

Virgin holds a 49 percent stake and the government has no equity. Institutional investors are expected to sell half of their 51 percent stake in an initial public offer on the Nigerian Stock Exchange once the airline gets airborne.

Virgin Nigeria has already ordered a number of aircraft on lease and plans to operate domestic and regional routes in Africa, and international destinations including the Middle East and Europe.

Privately-owned Virgin, whose Virgin Atlantic already operates the lucrative London-Lagos route, was appointed as the technical and strategic investor in the carrier last September after talks with South African Airlines fell through.

The new operator may be prevented from flying direct to the United States, however, because of a dispute between Washington and Britain over competition policy.