Virgin Calls Bottom of Market With Airline Fund

Stephen Harris

7 July 2008

A new private-equity-style vehicle managed by Virgin Group executives, is seeking at least $1billion to back start-up airlines and to invest in carriers in financial difficulties, according to a report in The Times.

The vehicle, provisionally entitled Virgin Aviation Fund, is talking to Pension funds, hedge funds and sovereign wealth funds about funding for the enterprise, which the report says is a sign that some investors are calling the bottom of the market. It will aim to exploit opportunities arising from the consolidation and deregulation of the airline industry, along with the soaring cost of airline fuel.

Sources say that the fund will raise between $600million and $750 million by the first closing this summer and that it aims to raise between $1 billion and $1.5 billion. Virgin will own a majority stake in the management company that will run the fund.

Stephen Murphy, the chief executive of Virgin Group, and David Baxby, the head of aviation, will play key roles in the management company, according to The Times.