Sir Richard Branson raised $225 million (£113 million) yesterday by mortgaging about a third of his 10 per cent shareholding in Virgin Media to invest in space tourism and other activities.

Sir Richard’s Virgin Group had the chance to sell some of its shares in the cable company last month, but opted to raise money against 12.8 million of its shares because it believes that Virgin Media’s share price is too low at $24 to justify baling out.

The cash comes from Credit Suisse, which is lending Virgin Group the money for two years and pocketing a fee of $83 million. Sir Richard will pay no interest on the cash borrowed after that. Virgin Group retains the voting and dividend rights attached to the shares in Virgin Media, which formerly was NTL.

Will Whitehorn, a spokesman for Virgin Group, said: “We took the decision not to sell because we believe that the company has very good value prospects in the medium to long term – but we did want to raise money because a lot of capital was tied up in the shareholding”. Virgin Group needs to raise another $50 million to complete the building of its second spaceship, for its planned suborbital flight service. It also wants to generate seed capital to develop its branded mobile service in India and other Asian markets, and develop its biofuel programme for commercial aircraft.

The agreement is also carefully structured so that Virgin Group can benefit from any future rise in the share price of up to $31.98, so that if a private equity bid for Virgin Media were to materialise, Sir Richard could consider cashing in again. Credit Suisse gets any benefit thereafter if the stock rises above the threshold at the end of the agreement in 2009.

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