The Pandemic Hurt Richard Branson's Business Empire. He's Looking For New Deals Anyway

VG Acquisition Corp, a “blank-check” firm based by the chief of Virgin Group, filed on Wednesday for an preliminary public providing on the New York Inventory Alternate.

The aim: elevate $400 million and use that cash to purchase undervalued American and European client companies in sectors the place Virgin has had success, together with journey, leisure, leisure and monetary companies.

“We imagine that the Covid-19 disaster has brought about momentary dislocations in a number of of our focus sectors, making a uncommon alternative to put money into essentially sturdy goal companies at enticing valuations,” the corporate mentioned in a submitting with the US Securities and Alternate Fee. A goal has not but been chosen, the corporate mentioned in its submitting.

Branson is the most recent high-profile particular person to lift capital by way of a SPAC, after hedge fund billionaire Invoice Ackman’s Pershing Sq. Tontine Holdings raised $four billion within the largest IPO of its type on document in July.

Within the first eight months of this yr, SPACs raised over $33 billion throughout 81 IPOs, greater than double the proceeds raised in 2019, in accordance with Deloitte.

“This surge has been pushed by the inflow of high-profile traders and administration groups getting into the SPAC area, coupled with an abundance of uninvested capital that had largely been sitting out the primary half of 2020,” the skilled companies agency mentioned in a report this month.

Branson already has some expertise with the funding autos, having used a SPAC to take his area tourism enterprise Virgin Galactic (SPCE) public last year.

Betting on Branson

However traders might marvel in regards to the timing. Branson’s companies, such because the lately launched Virgin Voyages cruise line and Virgin Accommodations, that are each based mostly in the US, have been badly damage by the pandemic and can proceed to battle within the face of journey and tourism’s worst ever downturn.

In Could, Virgin Group was compelled to relinquish management of Virgin Galactic to lift tons of of thousands and thousands of {dollars} to fund different group firms, SEC filings present.

The carriers Virgin Atlantic and Virgin Australia have each wanted exterior funding to stay solvent. Virgin Atlantic secured £750 million ($970 million) from new and current shareholders in July as a part of a £1.2 billion ($1.6 billion) rescue package, whereas Virgin Australia was sold to Bain Capital for an undisclosed quantity.

Branson mentioned in April that he would raise money towards his Necker Island property within the Caribbean to guard jobs throughout the group.

With a lot consideration on current Virgin Group firms, Branson might have little time to hunt for brand spanking new prospects.

VG Acquisition Corp has given itself two years to discover a deal and isn’t limiting itself to any explicit sectors, telling traders that it may purchase one thing exterior of Virgin Group’s core classes if it finds the fitting alternative.

“We stay open to the numerous variety of alternatives that we anticipate will current themselves upon completion of this providing, notably given our founder’s public profile and the constructive consideration he generates throughout the enterprise group,” it mentioned.

Branson has a popularity for taking daring dangers and looking for to disrupt sectors with established operators. Having began out as a mail order document retailer in 1970, the Virgin model is now hooked up to greater than 40 companies worldwide, which collectively generated $22 billion of income of their newest monetary yr.

— Michelle Toh contributed reporting.

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