The COVID – 19 pandemics has rocked the foundations of Richard Branson’s business empire. Now, it seems like the billionaire might making an offensive move. He aims to raise $400 million and use the money to purchase undervalued European and American consumer businesses in industries where Virgin was successful, industries like leisure, travel, financial, and entertainment services. This plan can assist Richard Branson to take advantage of what seems like limitless appetite from investors for SPACS or special purpose acquisition companies which are all shell companies with limited or limitless assets for operating that can raise money through IPOS for the sole purpose of buying existing businesses.
Branson has become that latest high profile individual to make money through SPAC this after billionaire Bill Ackman’s hedge fund the Pershing Square Tontine Holdings manage to raise $4billion in the biggest IPO recorded of its kind in July. Branson has experience with investment vehicles and has once used SPAC to take Virgin Galactic his space tourism business public last year. Investors are a bit worried about the timing. Some of Branson’s businesses like the Virgin Hotels and Virgin Voyages which was launched recently both of which are based in the United States have been financially hurt by the coronavirus pandemic and they are expected to struggle in the worst-ever downturn in the tourism and travel industry. The Virgin Group was forced to let go of its control of Virgin Galactic in May in order to raise millions of dollars in order to fund other group companies. The carriers Virgin Australia and Virgin Atlantic have both required investment from outside to remain solvent.
Virgin Atlantic managed to raise 750 million pounds from existing and new shareholders as part of a 1.2 billion pound rescue package in July while Virgin Australia was bought by Bain Capital for an undisclosed amount of money. In April Branson said he would raise capital from his estate in the Caribbean, Necker Island in order to protect jobs in the Virgin Group. With a lot of attention has been put on the companies in the Virgin Group, Branson may have limited time to look for new prospects.
Virgin Group Acquisition Group has handed itself a deadline of two years to look for a deal in any sector, telling its investors it will purchase anything outside the core categories in the Virgin Group if it unearths the right opportunity. Branson has made a reputation for looking to disrupt industries with already established operators and taking bold risks. He started out in 1970 as a mail-order record retail, around the world the Virgin brand is associated with more than 4 businesses which altogether generated 22 billion dollars in revenue last year.