BRITAIN’s Virgin Group has abandoned its planned flotation of Virgin Rail in favour of a partnership with Stagecoach Holdings. Under a deal announced on June 22, Stagecoach will pay £138m for the 59% venture capital equity interests in Virgin Rail, and a further £20m for loan stock at par. It will then transfer 10% of the equity free of charge, giving Virgin Group control of Virgin Rail. Stagecoach would retain the remaining 49%.
Virgin Group Corporate Affairs Director Will Whitehorn says the deal values Virgin Rail at £282m, against a planned flotation price thought to be around £250m. The plan has been endorsed by venture capital companies such as J P Morgan and Bankers’ Trust which hold the equity stakes. It has yet to be approved by Franchising Director John O’Brien, and by Rail Regulator John Swift QC. o
Whitehorn says teaming up with a major bus operator will help develop Virgin Rail in tune with government thinking. ’Integrated transport policies will bring the need to bring buses and trains closer together.’
