Richard Branson is free to sell up to half his stake in his space tourism venture — potentially raising close to $1bn — after a little-noticed filing by Virgin Galactic lifted constraints on investors.
The entrepreneur has come under fire for seeking state help for Virgin Group’s airlines businesses, which have been hammered by the Covid-19 pandemic.
But even as other parts of the empire have been paralysed, Virgin Galactic’s market value has almost doubled from $2.3bn at its initial public offering six months ago to $4.25bn, lifting the value of Virgin Group’s stake close to $2bn.
A US securities filing last week clears the way for Virgin Group to sell up to half its holding and — coupled with the publication of first-quarter results this week — removes some barriers to insiders selling shares in the coming weeks.
Virgin Group, which declined to comment, is unlikely to be able to place a stake that large in Virgin Galactic in one block, and it cannot sell the remaining half until two years after the IPO.
Virgin Galactic has yet to send any paying passengers to the edge of space, although it has flown five crew members on two successful test flights and taken 600 reservations from would-be astronauts, including celebrities such as the actor Leonardo di Caprio.
Cashing in part of his holding would allow Sir Richard to inject more capital into Virgin Atlantic, the airline which has asked the UK government for up to £500m of support in the form of loans and guarantees.
The request for state help has exposed Sir Richard to criticism because of his estimated $4bn-plus wealth and because he is resident not in the UK, but in the low-tax British Virgin Islands.
Any sale would also free up cash to inject into Virgin Australia, which has collapsed into administration, wiping out Sir Richard’s 10 per cent equity stake. The Australian airline has attracted interest from several interested parties and Virgin Group may come in alongside a new investor to retain a voice in its future.
Sir Richard has invested almost $1bn in Virgin Galactic, as well as roughly $600m in Virgin Orbit, a still nascent satellite-launching business. He had hoped to make his own maiden flight last year, to coincide with the 50th anniversary of the first Apollo moon landing, but this week the company said only that it remained focused on getting him to the edge of space “as soon as we can”.
“It would be a huge thing for them — They’ve said for years now that this is the year Richard Branson will go up,” said Laura Forczyk, a consultant at Astralytical who said the maiden flight was looking unlikely to happen this year, even before the pandemic. “They’re making technical progress,” she said, but a move to New Mexico slowed the company down.
“There’s no doubt it’s hype — their whole business is hype. But if it plays out, it will be a big moment,” she said of the prospect of Sir Richard’s first flight.
Virgin Galactic, which this week hailed a new partnership with Nasa around high-speed flight technologies, has also raised money from more than 400 people who have paid it refundable deposits under its “One Small Step” initiative. The venture has lost almost $500m over the past three years.