Virgin Group founder Richard Branson had nearly $2 billion tied up in global stock markets a couple of yr ago, mostly from several cash-burning U.S. firms listed through blank-check firms.
Steep drops in these U.S. stocks have since reduced their total value by as much as 95%, and now, with Nationwide Building Society’s announced money takeover of Virgin Money UK Plc, the publicly traded portion of Branson’s wealth will soon all but disappear.
Overall, Branson’s falling stock holdings have caused his net value to fall by about half to about $3 billion since mid-2022, in line with the Bloomberg Billionaires Index, underscoring how the post-pandemic economy is destroying one among Britain’s biggest self-made fortunes. Aside from his stake in Virgin Money, value about 413 million kilos ($520 million) in line with Nationwide’s offer, his disclosed publicly traded holdings amount to lower than $75 million.
“In these times when things go wrong, it’s tough,” said Claire Madden, managing partner at London-based private equity firm Connection Capital. Branson’s empire “had a big side-shock from Covid.”
Branson’s dwindling stock holdings are limiting his ability to pump money into his sprawling empire as parts of it still struggle to get well from the pandemic, which forced the 73-year-old British billionaire to make use of his publicly traded holdings to make closely-held investments to support Virgin firms.
Branson sold greater than $1 billion value of shares in 2020 and 2021 in Virgin Galactic Holdings Inc., his space tourism company that merged with a blank-check company founded by Chamath Palihapitiya months before the Covid-19 outbreak.
Those sales helped finance a £1.2 billion rescue package for airline Virgin Atlantic, a flagship among the many greater than three dozen firms in Branson’s tight-knit empire. Virgin Group also helped inject £50m into its namesake gym chain last yr to hurry up its recovery from the pandemic.
A representative for London-based Virgin Group, which doesn’t release consolidated financials, declined to comment.
Branson’s wealth peaked at nearly $8 billion in early 2021 as record-low rates of interest fueled a pandemic bull market. Virgin Galactic’s shares rose nearly 400% prematurely and eventually accounted for nearly half of his total net value.
Shares of the Las Cruces, New Mexico-based company have since fallen about 98% from their 2021 peak after scuffling with share price performance issues and financial results that fell wanting Wall Street expectations. Shares of other publicly traded firms that emerged from Branson’s deals with special purpose acquisition firms (SPACs) have performed even worse.
Satellite services company Virgin Orbit Holdings Inc. went bankrupt last yr, lower than 18 months after completing a merger with blank-check company NextGen Acquisition Corp II. So did shares of genetic testing company 23andMe Holding Co. and e-commerce company Grove Collaborative Holdings have plunged greater than 90% since merging with Virgin Group’s SPACs as recently as 2022.
The de-SPAC index, a basket of firms which have accomplished their mergers, has fallen greater than 20% this yr as many firms struggle to develop into profitable amid higher financing costs. In comparison, the S&P 500 index recorded a rise of just about 10%.
After founding Virgin Money in 1995, Branson upped his ante in 2011 by leading a £747 million deal to purchase British lender Northern Rock from the British government after the bank was within the early stages of worldwide financial crisis had collapsed.
Seven years later, Branson greater than doubled his original £50 million investment when Clydesdale Bank agreed to amass Virgin Money, creating the UK’s sixth-largest lender in a £1.7 billion takeover. He retained a stake of around 13% within the merged company.
“We were ready for a new challenge,” Branson said in a blog in November post concerning the founding of Virgin Money. “It was an opportunity to transform a stagnant industry.”
Mallorca hotel
Nationwide and Virgin Money are actually poised to overtake NatWest Group Plc because the UK’s second-largest provider of home loans behind Lloyds Banking Group Plc. The transaction is anticipated to shut within the fourth quarter.
Other Virgin Group assets are also supporting Branson’s fortunes, at the same time as his SPAC bets drag it down.
His holding company owns a five-star hotel in Mallorca, where property prices have recently risen, while his airline has outlined plans to return to profitability this yr. Virgin Group has also launched recent businesses within the hotel and cruise ship sectors, while its enterprise arm has previously made early-stage investments in firms equivalent to Pinterest Inc., Block Inc. and Wise Plc.
Virgin Group’s licensing arm, meanwhile, is generating more revenue than before the pandemic, giving it an estimated value of around $1 billion and making it Branson’s largest single asset, in line with Bloomberg’s wealth index.
That unit will proceed to receive revenue through Virgin Money for years after the Nationwide deal closes, underscoring that a few of its most conventional deals – reasonably than loss-making SPACs – are actually fueling its empire.
“You can only do nonprofit businesses like this to a certain extent,” Madden said. “It’s about making money at the end of the day.”
