Richard Branson scrambles to save his flailing Virgin empire

      Published on Thursday, 14 May , 2020      1727 Views     
Richard Branson scrambles to save his flailing Virgin empire

Covid-19 is exacting a heavy financial toll on one of the world’s most-recognizable entrepreneurs.

Richard Branson already has pledged a Caribbean island and at least $250 million to shore up a leisure and travel empire roiled by the coronavirus pandemic.

Now he’s selling a chunk of his stake in Virgin Galactic Holdings Inc, his most valuable listed asset, to raise as much as $500 million.

Over the past half century, Branson built Virgin Group into a sprawling collection of businesses with annual revenues exceeding $20 billion. But his practice of plunging most of the profits back into the ventures has left him scrambling for cash as governments balk at bailing out a billionaire famous for his flamboyant publicity stunts.

“He’s made a career for himself as the ultimate disruptor,” said David Hawkins, co-founder of family business consulting firm Percheron Advisory. “But now he’s faced with a disruptive world and, ironically, it’s not working for him right now. He’s again got to get ahead of the curve.”

Virgin Group spokesman Nick Fox said the Virgin Galactic stake held by investment company Vieco 10 could fall below 50%, depending on the size of the offering. Virgin Group owns 81% of Vieco 10, with the balance held by Aabar Space, an Abu Dhabi investment company. Virgin Galactic Chief Executive Officer George Whitesides declined to comment.

Branson, 69, isn’t alone. The market plunge triggered by the spread of the coronavirus has put pressure on rich families worldwide, with some facing margin calls this year on share-backed debt facilities.

Still, his are particularly high-profile struggles. Over the years, Branson has attempted world records, drove a tank down New York’s Fifth Avenue and leaped from the roof of a Las Vegas casino wearing a black suit and harness to launch one of his airlines.

Retaining Control

Few industries have been hit harder.

Virgin’s Australian airline is in administration, and Virgin Atlantic Airways Ltd. courted potential investors Monday to avoid a similar fate. Just last year, Virgin Atlantic’s future seemed so promising that Branson scrapped the sale of a 30% stake to Air France-KLM in favour of retaining control.

“Because many of our businesses are in industries like travel, leisure and wellness, they are in a massive battle to survive and save jobs,” Branson said in a March blog post.

Virgin Galactic started trading publicly last year after merging with U.S. investment firm Social Capital Hedosophia. Branson will still have a stake worth more than $1 billion in the space-travel company even if he sells the maximum proposed amount disclosed Monday.

His net worth has dropped 12% this year to $5.1 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.

Branson’s other assets include a $169 million stake in Virgin Money UK Plc, a Swiss ski chalet in Verbier and an African game preserve.

Living in the British Virgin Islands — where residents pay no income or capital-gains taxes — hasn’t helped Branson in his bid for a bailout from the U.K. government.

He said he bought his Caribbean island at age 29 because of his love of the locale and not for tax reasons.

“Happy to hear Branson is putting his hand in his own pocket rather than our tax coffers,” Labour Party lawmaker Margaret Hodge said Monday in a tweet.

Category Gulf News | 2020/05/14 latest update at 1:00 PM
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