Richard Branson has joined the crush of high-profile investors looking to raise funds for blank check companies, launching a $ 400 million vehicle that is said to seek deals to grow the Virgin Group brand in the United States.
The best-known British billionaire’s finances have been strained by the impact of Covid-19 on Virgin’s business, from airlines to gyms, prompting him to suggest in April that he may need of mortgage your house in the British Virgin Islands.
Instead, the group sold more than $ 500 million in shares of Virgin Galactic, the space tourism firm Sir Richard backed into a blank check company founded by former Facebook executive Chamath Palihapitiya. , in 2019. Much of that capital went to its airlines, Virgin Atlantic and Virgin Australia.
These “special purpose acquisition companies”, or Spac, have found new followers in recent months, despite a record underperformance, attracting investors, including a billionaire from hedge funds Bill ackman and Billy Beane, the sports executive.
Virgin declined to comment, but a filing with the Securities and Exchange Commission describes Cayman Islands-registered Spac, VG Acquisition, as seeking deals in consumer-facing industries that Virgin is already familiar with, ranging from travel and leisure to financial services and health. well-being.
He has yet to choose a target company or begin discussions on a deal, the document says, but he maintains that the pandemic has created “a rare opportunity to invest in fundamentally strong target companies at attractive valuations.” Spac would have two years to spend the $ 400 million it raises or return it.
Spacs are being touted as an alternative to the traditional initial public offering process, which some say is too onerous and uncertain for companies looking to list their shares. Blank check vehicles have raised a record amount this year to buy private companies that want a stock market listing.
Some Spac executives have promised to address concerns about the structure of the vehicles, which can make them lucrative for sponsors who often receive a 20% stake in the target company after a merger is agreed.
Fundraising for VG Acquisition, underwritten by Credit Suisse, could provide new capital to Sir Richard to advance a ambition to develop the Virgin brand in the United States.
The recent launches of Virgin Hotels, Virgin Trains USA and Virgin Voyages, a Miami-based cruise line, have been seriously delayed by the pandemic, and it has yet to find a partner to launch Virgin Money in the United States.
Virgin typically invests much smaller amounts in its transactions, and Sir Richard is used to finding high net worth individuals, private equity partners and sovereign wealth funds to provide much of the capital for its launches. But its finances have come under scrutiny this year after seeking help from the UK and Australian government to bail out its struggling airlines.
The IPO filing lists Sir Richard as founder of VG Acquisition, but the company is reportedly headed by two of its executives: Josh Bayliss, chief executive of Virgin Group, and Evan Lovell, its chief investment officer.