Virgin Group Ltd updates
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Sir Richard Branson’s Virgin Group has sold $1bn worth of shares in Virgin Galactic, the space travel company that went public through a special purpose acquisition company, in just over a year.
The group, which has significantly reduced its stake in Virgin Galactic over the past year, offloaded another $300m worth of shares earlier this week, according to filings with the US Securities and Exchange Commission, bringing total sales to just over $1bn.
Virgin Galactic is thought to be one of the early accelerants of the boom in blank-cheque companies after it listed in 2019 to much fanfare. The space start-up combined with Social Capital Hedosophia, a Spac led by former Facebook executive Chamath Palihapitiya, in a deal that valued the company at $2.3bn when it listed. The valuation has since almost trebled to $6.6bn.
Spacs, which have raised about $110bn so far this year to hunt for private companies to take public, have come under increasing scrutiny from regulators. Officials at the SEC have called for greater transparency around benefits that accrue to insiders.
Virgin Group started selling down its stake in Virgin Galactic in May last year, offloading approximately $568m worth of shares over several weeks. It made further disposals in April and August that totalled $450m worth of shares including the $300m sold this week, regulatory filings show.
A representative for Branson, who recently beat Amazon founder Jeff Bezos as the first billionaire to fly into space, said the proceeds from the share sale would be used to “support its portfolio of global leisure, holiday and travel businesses that continue to be affected by the impact of the Covid-19 pandemic”.
Virgin Group has been hard hit by the pandemic, with Branson at one point saying he would mortgage his private island to help shore up his struggling businesses. He had come under criticism for seeking government aid in both the UK and Australia.
Virgin Galactic has been a bright spot in his business portfolio, with the shares rising to more than $60 in February. However, they have lost almost two-thirds of their value since then and are currently trading at about $25. Morgan Stanley downgraded the stock to an underweight rating earlier this week.
Michael Colglazier, Virgin Galactic chief executive, said last month the company planned to offer at least one flight per day, though he did not give a timetable for expanding commercial operations.
While Branson has sold the biggest chunk of Virgin Galactic shares, Palihapitiya, one of the company’s biggest backers, sold the remainder of his personal investment in March for $200m. The tech investor, who has become a familiar face on Wall Street after launching a series of Spacs, said he would redirect the cash to climate initiatives.
Palihapitiya and his Spac partner, Ian Osborne, still own shares they received through the blank-cheque vehicle that took Virgin Galactic public.
Virgin Group remains the single largest shareholder in Virgin Galactic with an 18 per cent stake.