Monday, 20 August 2007

Virgin to go Public

Sir Richard Branson and the Virgin Group have put aside years of hostility towards public markets to adopt a new investment strategy that embraces the world’s stock markets. The group, which had revenues of £10 billion last year, plans to operate like a private equity firm and sell the businesses it owns via the stock market. In an exclusive interview with The Times, Stephen Murphy, Virgin’s chief executive and head of the group’s powerful investment committee, said: "We think of our peer group now being people like Apax and Blackstone.” While planning to float its businesses, Virgin will retain a stake in them and keep directors on their boards in order to protect the brand.

The company is already pursuing a New York listing for Virgin Mobile USA. Virgin Active, its health club chain, is likely to be the next to float. Sir Richard’s first flirtation with the stock market was in 1986, when he listed the Virgin Group but he took the business private again two years later after becoming frustrated by what he saw as short-termist institutions. However, Sir Richard has now handed executive control of the Virgin Group to a committee of his closest advisers and they are adopting a new plan for expanding the famous brand. Mr Murphy said: “Once we have built a company to a point where it has reached a level of stability and maturity we will seek a public exit. We are much more comfortable with that idea now but there are no firm targets of how many businesses we want to float.” Mr Murphy will use the brand to help to launch new ventures and expand existing businesses, in a strategy of “branded venture capitalism”.

Gordon McCallum, Virgin’s strategy director, said: “A lot has been said about Richard not liking public markets but it is quite a good way of getting the right sort of governance over a company if you only have a minority shareholding.” Virgin is also courting private equity buyers and the group has been approached with offers for a number of its key businesses. Mr Murphy said: “Private equity buyers have now become a viable alternative and many listings are being pre-empted by these buyers.” Virgin Atlantic, the airline, could make its way to the stock market or into private equity hands. Singapore Airlines, which owns 49 per cent of the carrier, is considering selling its stake.

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