Sir Richard Branson has been forced to trim 15% off the flotation price of Virgin Mobile Holdings (UK) Plc, after institutional investors rejected the original pricing as too high.
Branson has built a massive business empire spanning airlines through to music shops. He had been planning to issue 98 million Virgin Mobile shares (or roughly 40% of the company) in a flotation to help his Virgin Group raise the money to help push the flotation of his much larger US mobile business, Virgin Mobile USA, and to help generate cash ahead of the launch of a domestic airline in the United States next year.
However, at the weekend it became apparent that the market was not happy with Branson’s pricing of the issue, and on Monday he was under pressure either to lower the price of the shares, or withdraw the IPO altogether.
In the end, he decided to reduce the price range from the original 235p ($4.35) to 285p ($5.28) price range, down to 200p ($3.71) to 220p ($4.08). The company blamed tough market conditions for the move.
Branson also decided to reduce the percentage of the company offered from between 37% to 43%, to just 25%.
The operator will now have an equity value of roughly 500m pounds ($927m), almost half of the 1bn pounds ($1.85bn) it first touted, when it floats on the London Stock Exchange on Wednesday morning.