Virgin Group (UK)

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Virgin Group is the corporate umbrella for a network of more than 100 different companies, offering a bewildering variety of services. The best known is the Virgin Atlantic airline. Other companies are involved in areas such as telecoms (Virgin Mobile), cable TV (Virgin Media), financial services (Virgin Money), rail travel (Virgin Trains) and fitness (Virgin Active). None of them is wholly owned, and in several, despite the brand name, the Virgin Group doesn't have management control or even a shareholding, merely a licensing agreement. Yet figurehead Sir Richard Branson remains without question the UK's best-known business figure. He has built his empire on a series of extraordinarily risky gambles, which few would be wise to emulate. At the same time, the scale of each new gamble became bigger and bigger. In 2006, Branson secured a controlling minority shareholding in the UK's only significant cable TV network and attempted to use that as the platform to take over the commercial broadcaster ITV. That strategy failed. However the following year, he made a similar attempt to reverse his financial services unit Virgin Money into the struggling mortgage bank Northern Rock some ten times its size. That bid also appeared to have failed, but only at first. Branson eventually achieved his goal in 2011, when Northern Rock was again put up for sale by the government. As he grows older, though, he has become less promiscuous with his investments, reducing his portfolio to a smaller collection of more viable businesses, and he more or less retired from active involvement in the group in 2012.

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Virgin Group website

Brands

Virgin Atlantic Virgin Media
Virgin Money Virgin Active
Virgin Trains Virgin Wines
Virgin Mobile Virgin Publishing

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 23rd Apr 2015: Virgin Group and its private equity partner CVC agreed to sell control of the Virgin Active health clubs business to South African investor Christo Wiese. His Brait SE investment umbrella will acquire almost 80% of Virgin Active for £682m. CVC is cashing out altogether, while Virgin will be reduced to 20%. Management retain a small stake. Virgin Active claims to be the biggest gym chain by far in South Africa, as well as the local leader by revenues in the UK and Italy. It has 1.3m members worldwide, through 267 clubs in nine countries. 

Adbrands Weekly Update 20th Nov 2014: Richard Branson raised a significant amount of capital through the IPO of the Virgin America low-cost airline and UK lender Virgin Money. It's thought that a sizeable amount of the new cash will be earmarked for investment into Virgin Galactic, which is continuing to burn cash in the wake of its recent test flight crash. Virgin Group reduced its stake in Virgin Money to around 34%, raising around £70m in cash. It's not clear how much of the group's stake in Virgin America was sold, but its $360m IPO was the second-largest by any US airline, and shares soared by over 50% in initial trading. Virgin Money was rather less stellar, with its shares trading slightly below their offer price.

Adbrands Weekly Update 6th Nov 2014: Virgin Group faces a daunting challenge to its much-hyped but long-delayed bid to launch commercial space travel for paying customers, following the mid-air break-up of its latest test flight. That accident claimed the life of one test pilot and seriously injured another. Though the company is so far vowing to press ahead with the project, the disaster has heightened scrutiny of Virgin Galactic's approach to safety procedures, raising fears that these might share some of the general informality of the wider Virgin Group's corporate culture. Newspaper coverage over the weekend suggested that the group had previously received but disregarded warnings from the main space safety industry regulator over its volatile fuel system, though those claims were denied by Virgin. An initial survey into the crash by the National Transportation Safety Board appeared to suggest that pilot error may have caused or contributed to the break-up of the aircraft. However, that possibility will do little to ease the growing concerns of celebrity passengers who had been expecting to take their debut space flight in just a few months time. The group confirmed it has received a "handful" of cancellations. The tragedy is likely to push back Virgin Galactic's maiden commercial flight by at least another several years, if not indefinitely. That will raise serious funding issues since the business is already thought to have exhausted the initial capital investment provided by equity partner Aabar of Abu Dhabi, and is now being funded entirely from within Virgin Group. As a result, Virgin is to press ahead with the previously postponed IPO of Virgin Money this month, and also announced an IPO of its US regional airline Virgin America before the end of the year. Another concern is the damage that any further bad news from Virgin Galactic would inflict on all the multiple other businesses not directly controlled by Richard Branson who currently pay him royalties to license the Virgin name.

Adbrands Weekly Update 9th Oct 2014: Virgin Money, the "challenger bank" created by Sir Richard Branson from parts of failed UK lender Northern Rock, announced plans to issue an IPO later this month with the aim of raising up to £150m of capital. Around 25% of the business will be floated, leaving Virgin Group with around 47% and private equity partner WL Ross with 45%. The bank hopes to grow its share of the troubled UK banking sector, capitalising on customer mistrust of the current big five lenders. For now, though it remains a minnow, with just 1.6% of the mortgage sector and 1.4% of savings. [Revision 17th Oct 14: Those IPO plans were cancelled only a week later as a result of turbulence in global financial markets]. Separately, Virgin Atlantic pulled the plug on its UK regional airline Little Red, launched 18 months ago with airport slots previously controlled by BMI. The plan was to use the regional service to feed into Virgin Atlantic's long-haul service, but take-up was limited. As usual, Branson blamed regulators, British Airways and everyone else for "stacking the odds" against him.

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