Richard Branson to raise $460m for blank cheque investment company

British billionaire's move comes as 'special purpose acquisition vehicles' see boom in funding

Sir Richard Branson
Sir Richard took Virgin Galactic public through a reverse merger last year Credit: AFP

Sir Richard Branson plans to raise up to $460m (£355m) for a publicly-listed blank cheque company run by the British billionaire’s Virgin Group.

VG Acquisition Corp, a special purpose acquisition company (SPAC), said in a US filing on Wednesday that it plans to raise between $400m and $460m on the New York Stock Exchange.

The funds will be used at some point to buy or invest in companies that the Virgin brand will be attached to. SPACs have recently become fashionable on Wall Street as a way to tap vigorous investor demand for public stocks, and many well-known investors have started their own.

Investors back the vehicle, whose shares trade on the stock market as it identifies opportunities. Private companies typically merge with the SPAC, taking them public in a so-called “reverse listing”.

Sir Richard’s space tourism company Virgin Galactic went public last year by merging with a SPAC run by early Facebook employee and Silicon Valley investor Chamath Palihapitiya, in a deal that was seen as setting off the current boom.

VG Acquisition Corp will be led by Virgin Group chief executive Josh Bayliss, with Sir Richard listed as its “founder”. Sir Richard will have a 19pc stake, and will invest up to $11.2m in exchange for the right to buy shares at a fixed price later on. 

The vehicle said it would look for a target company in one of Virgin’s key areas: travel, finance, health, technology, music and entertainment, media, telecoms or energy and would be seeking a consumer-facing business that it would attach the Virgin brand to.

It said the coronavirus pandemic created an opportunity to invest in businesses at “attractive valuations.” SPACs have already raised almost three times more than the $13.6bn they raised last year, itself a record, with high-profile investors such as Bill Ackman starting such vehicles. 

Veteran Silicon Valley venture capital investor Bill Gurley has promoted them as a way to avoid the high banker fees charged when a company typically goes public.

Sir Richard had planned to further expand the Virgin name in the US, but several of his ventures, such as cruises and hotels, have struggled during the pandemic. Virgin Atlantic, the airline that he holds a 51pc stake in, has cut thousands of jobs, recently agreed a £1.2bn rescue deal that includes new cash from Virgin Group.