VG Acquisition Corp, a “blank-check” company founded by the leader of Virgin Group, filed on Wednesday for an initial public offering on the New York Stock Exchange.
The goal: raise $400 million and use that money to buy undervalued American and European consumer businesses in sectors where Virgin has had success, including travel, leisure, entertainment and financial services.
“We believe that the Covid-19 crisis has caused temporary dislocations in several of our focus sectors, creating a rare opportunity to invest in fundamentally strong target businesses at attractive valuations,” the company said in a filing with the US Securities and Exchange Commission. A target has not yet been selected, the company said in its filing.
In the first eight months of this year, SPACs raised over $33 billion across 81 IPOs, more than double the proceeds raised in 2019, according to Deloitte.
“This surge has been driven by the influx of high-profile investors and management teams entering the SPAC space, coupled with an abundance of uninvested capital that had largely been sitting out the first half of 2020,” the professional services firm said in a report this month.
Betting on Branson
In May, Virgin Group was forced to relinquish control of Virgin Galactic to raise hundreds of millions of dollars to fund other group companies, SEC filings show.
With so much attention on existing Virgin Group companies, Branson may have little time to hunt for new prospects.
VG Acquisition Corp has given itself two years to find a deal and is not limiting itself to any particular sectors, telling investors that it could buy something outside of Virgin Group’s core categories if it finds the right opportunity.
“We remain open to the significant number of opportunities that we expect will present themselves upon completion of this offering, particularly given our founder’s public profile and the positive attention he generates within the business community,” it said.
Branson has a reputation for taking bold risks and seeking to disrupt sectors with established operators. Having started out as a mail order record retailer in 1970, the Virgin brand is now attached to more than 40 businesses worldwide, which together generated $22 billion of revenue in their latest financial year.
— Michelle Toh contributed reporting.