Sir Richard Branson is a mass of contradictions. A man who often appears shy, yet has built a brand around his charisma. Someone who vaunts his social conscience, but who lives as a tax exile on Necker island. A fervent environmentalist, who wants to send wealthy travellers into space.
One of the biggest inconsistencies is that his public persona – that of an entrepreneur running a multifarious business empire – does not reflect reality. In fact, Sir Richard manages very little. His Virgin Group owns stakes – few of them majority ones – in a vast range of businesses, but as an investor rather than a manager. Indeed it most resembles a huge “family office” with a portfolio run by professional investment managers and the profits channelled – via a number of trusts and a network of holding companies – to the Branson family.
The crash of the Virgin Galactic spacecraft on Friday and the death of one of its pilots strike at the heart of the contradictions of the Virgin empire, contradictions which show that it is less robust than it might appear.
“Richard is interested in what is happening in the investment portfolio, but doesn’t run any of the businesses in it,” says Josh Bayliss, chief executive of Virgin Group Holdings, which manages Sir Richard’s investment portfolio and the Virgin brand. “His attention on a day-to-day basis is not on the operational aspects of the businesses.”
Of the about 80 businesses which bear the Virgin name, spanning sectors from travel, transport, leisure, entertainment, telecoms and media, less than half have direct stakes held by Virgin Group. Virgin companies made £15bn in revenues in the past financial year, but these bear little relation to the value or performance of the holding company. VGH owns 27 per cent of the 12 largest Virgin companies by revenues.
And those group companies are not even the most significant holdings in its investment portfolio. Virgin Money, which is only the 12th largest Virgin company by revenue, accounts for 15 per cent of the portfolio, with Virgin America at 10 per cent, followed by Virgin Active, Virgin Atlantic and Virgin Mobile France.
VGH makes a significant amount of its money not from cash flows from its investments – particularly since a number of large Virgin businesses do not turn a profit – but from the fees it charges companies for lending them the Virgin name. The Branson family’s wealth, therefore, is dependent on the value of the Virgin brand which is intimately linked to Sir Richard himself.
“Every day that Richard gets older the issue of the Virgin brand becomes a bigger one because so much of it is tied to him,” says Jez Frampton, chief executive of Interbrand, the brand consultancy.
Since 2005, Sir Richard, 64, has stepped back from day-to-day running of Virgin Group Holdings, to focus on his charitable activities and space tourism.