Outlook: Branson pawns his past to finance the future

SO SINGAPORE GIRL finally snares Virgin Boy. He chased her until she caught him, as they say. Richard Branson may have made the first overtures back in October but it is Singapore Airlines which has captured the prize it has quietly been coverting for seven years. And at a fancy price too.

If Virgin Atlantic, with just two per cent of the slots at Heathrow is worth pounds 1.2bn, British Airways, with 38 per cent of the action, must be wondering why it is valued at only pounds 4.5bn.

As ever with Virgin, Mr Branson has sold his past to finance the future. He did it in 1989 by offloading a 25 per cent chunk of Virgin Music to the Japanese. He repeated the trick more spectacularly in 1992 when his airline was in desperate need of cash and EMI agreed to pay him pounds 560m for the remainder of the music business.

This time the airline is the cash cow supporting the expansion strategy, even if the miasma of interlinking Branson family trusts makes it virtually impossible to determine how badly the rest of the Virgin group needs the funds.

Coventional wisdom has long held that Mr Branson would be forced to sell a stake in the airline to fund his new found enthusiasm for rail travel. Mr Branson's trainset will become a very expensive hobby when the subsidies he currently receives from the taxpayer turn into net payments to the Exchequer.

But the bearded one solemnly declares that not a penny of Singapore's money will be spent on trains. Not even if Mr Branson gets his way and is allowed to add the East Coast Mainline to his West Coast franchise.

No, this time the cash will be used to finance Virgin's voyage into cyberspace. In the past, Mr Branson has shown himself to be a supreme master at getting a small amount of money to go a long way, persuading others to stump up the readies while he trades on the power and value of the Virgin brand.

Virgin is one of the very few truly international brands ever exported from these shores. There is no reason why Mr Branson should not now be able to use it to leverage a very prominent position on the Internet at a relatively modest cost.

However, his expansion into telecoms will not be so inexpensive. Virgin will have to pay a deposit of pounds 50m just be allowed to bid next year for one of the five third generation mobile licences being auctioned by the Government. To succeed, the bid will probably have to exceed pounds 300m, and that is before Virgin starts building out a network.

But Virgin has never been short of partners happy to benefit from the reflected glory of the brand. Stagecoach paid handsomely for a 49 per cent stake in Virgin Trains when Mr Branson concluded that that business, too, might be more suited to a trade partner than a flotation.