Virgin Atlantic is looking to secure around £450m from private investors in order to go back to the UK government for help. It had its request for support turned down last month, and now needs to raise a total of £750m ($915m) before Westminster will reconsider its application. £300m ($366m) of this is likely to come from founder Richard Branson, while a reported 14 different firms are being courted to provide the rest.
14 suitors for Virgin Atlantic
As many as 14 different parties are interested in providing funding to struggling UK airline Virgin Atlantic, according to a report in today’s iNews. The outlet revealed that German financial powerhouse Deutsche Bank is involved in the talks, which aim to secure £750m ($915m) to help the ailing airline.
In a very Virgin move, all potential investors were invited to a virtual conference earlier this week. Bloomberg states that at least a dozen firms were present, although they weren’t identified to each other during the video call. Questions had been handed in before the call, and Virgin’s CEO Shai Weiss proceeded to pitch his business to the firms.
The presentation included details of Virgin’s revenue generation plans, its joint venture with Delta, future network plans and more. Virgin is hoping to secure a package of support privately, which will give it more leverage to go back to the UK government for a loan.
As well as Deutsche Bank, other interested parties have been noted to include Apollo Global Management, Centerbridge Partners and Cerberus Capital Management, all New York-based private equity firms. Interestingly, Greybull Capital, former owner of failed Monarch Airlines, is also reported to have its hat in the ring.
i further reports that some of the world’s leading sovereign wealth funds are also involved. It named GIC and Temasek, as well as the Norwegian Government Pension Fund Global as being among the runners.
A spokesperson for Virgin Atlantic told Bloomberg,
“We are exploring all available options to obtain additional external funding. Discussions with a number of stakeholders continue and are constructive, meanwhile the airline remains in a stable position.”
Funds of £750m sought before the government will consider aid
Virgin Atlantic previously applied for a loan of £500m ($610m) from the UK government but was eventually turned down. The government stated that the airline needed to raise more equity on its own before it would be reconsidered.
As such, Weiss is courting these firms to help raise around £750m ($915m) in funding, although some of that amount may come from founder and major shareholder Richard Branson. The billionaire previously said the Virgin Group would look to sell a £400m ($488m) stake in Virgin Galactic to help both Virgin Atlantic and Virgin Australia, which entered voluntary administration last month.
Reports suggest that Branson will inject around £300m ($366m) to the airline, while investors will need to supply the other £450m ($549m) required. While things look hopeful so far, the airline has also appointed a restructuring specialist, Alvarez and Marsal, to work out a pre-packaged administration plan in case it fails to secure support.