According to press reports in a number of weekend newspapers, many institutional investors believe the share price offer is simply too high for the 40% stake of the firm that would be sold. However company officials, returning from a US investor roadshow on Sunday morning, have insisted the flotation is still on track.
The company is claiming it has received a high degree of interest from American investors. Yet this will not become apparent until the joint bookrunners and sponsors (JP Morgan and Morgan Stanley) start gathering orders from US institutional investors on Monday afternoon.
Sir Richard Branson is a British entrepreneur who has built a business empire spanning airlines to music shops. He had been planning to issue 98 million Virgin Mobile shares, and earlier this month set a price range of between 235p ($4.39) and 285p ($5.33), valuing the fifth-ranked UK mobile service at 588m pounds ($1.1bn) to 713m pounds ($1.33bn). This would allow Branson to pocket as much as 279m pounds ($522m).
Branson is keen to raise the money to help push the floatation 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.
Launched in November 1999, Virgin Mobile is a so-called virtual cellular operator that uses the network of Deutsche Telekom AG’s T- Mobile International AG unit, and resells minutes under the Virgin brand. Its main business comes from branded pay-as-you-go mobile phones, which are targeted mainly at the youth market. This has netted the operator approximately 4.1 million customers.
Virgin Mobile is planning two more days of investor meetings ahead of a final share pricing on Tuesday evening.
The first day of share trading is scheduled for Wednesday morning.
