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Branson to take Virgin Mobile public

Casting Call For The Billionaire Branson's Quest For The Best
Sir Richard BransonThos Robinson / Getty Images file
/ Source: Financial Times

Sir Richard Branson, the billionaire entrepreneur, is to go public with one of his companies on the main London market for the first time in 18 years, when Virgin Mobile, the "virtual" operator, is listed in July. 

The initial public offering could be the biggest of the year in London with the company expected to have an equity value of about £1bn ($1.8 billion), excluding £300m of debt. 

The Virgin Group owns 100 percent of the company after the German operator T-Mobile gave up its 50 percent stake in January, in a deal where it would receive up to £100m from the proceeds of any flotation. 

People close to the company said about 40 percent of Virgin Mobile would be sold in a refinancing that could raise at least £250m. 

Will Whitehorn, Sir Richard's chief lieutenant, told the FT the proceeds would be added to a war chest to expand the Virgin brand globally in airlines, financial services, cosmetics and further mobile operations. 

Virgin America, a low-cost airline, will launch in the US next year; Virgin Money is being expanded internationally; and a Virgin Mobile joint venture is planned for Canada in October. Virgin Cosmetics, run by Aim-listed Victory Corporation, is also set to go global. 

Virgin Mobile will be given an indicative price range on or near July 20 after a roadshow for institutional investors in the UK and abroad. People close to the float process said the initial support had been "fantastic". "This is a highly profitable and cash-generative company that is still growing significantly and could pay a resonable dividend," said one. 

Virgin Mobile was one of the first mobile virtual network operators when it launched in 1999, selling pay-as-you-go phones and buying capacity from the operator One2One, now T-Mobile. 

It has far outstripped the growth of rival services launched by the likes of Sainsbury, Carphone Warehouse and Tesco. It has more than 4m customers and reported revenues of £442m in 2003 and profit before interest and tax of £75m. 

The IPO is the third by a European operator this year, following the lacklustre floats of Belgium's Belgacom and Ireland's Eircom. 

Tom Alexander, chief executive, said: "There have been one or two IPOs that have been relatively mediocre but they have been more utility stocks than growth stocks like ourselves." 

The company announced that Charles Gurassa, a veteran executive of the travel and leisure industries, had joined the board as chairman with Sir Richard expected to become honorary president on listing. 

JP Morgan and Morgan Stanley will act as joint bookrunners and as underwriters with Investec Securities.