NEWS Richard Branson gritted his teeth today and slashed the price of shares in Virgin Mobile to 200p on its Stock Exchange launch.
Investors were keen and bid the price up to 206p in conditional dealing, pushing the company comfortably over a total valuation of £500m.
But it was still a disappointment for the Virgin empire, which was looking for a value of £1bn and share prices in the 235p to 285p range. Earlier in the year, some analysts were talking of a float that would value the UK’s fifth largest mobile operator at up to £4bn.
But the market had other ideas and Branson was forced to slash the share prices to get the offer away. He also reduced the offering from 43 per cent of the company to 25 per cent, to raise a modest £125m instead of the £588m to £713m he hoped for earlier this month.
And he's poised to toss in another 2.5 per cent of the company is there is a demand for the shares when they start proper trading later this week.
But Virgin employees will be happy. They are to get free shares worth £280 for each year that they have been with the company, up to five years or up to £1,400. According to a Virgin Mobile spokesman, this promise is not affected by the low launch price.
Around 95 per cent of Virgin Mobile’s 4m customers are on pay-as-you-go. Company plans to convert these to more profitable contract customers have yet to be revealed. The newly independent company will carry £311m worth of debt.
