The cash will be used to fund a variety of projects, including a new airline in America, buying radio licences in Asia and Australia, and possibly acquiring the 50 per cent of Virgin Money that Sir Richard does not already own.

Virgin Blue shares were priced at A$2.25 each (96p), valuing the airline at A$2.3 billion (£990 million). The offer was ten times oversubscribed. Sir Richard will retain 25 per cent of the equity, worth about A$570 million.

The discount airline was set up three years ago with about A$10 million of seed capital. Sir Richard had raised about A$520 million by this summer by bringing other investors on board, notably Patrick Corp. Licensing the use of the Virgin brand raised about A$80 million more.

Including the value of the existing stake, at yesterday’s float price, Virgin Group’s total reward from Virgin Blue is £630 million. Will Whitehorn, Sir Richard’s spokesman, said the deal was one of best investments that the entrepreneur had made. Excluding other investments Virgin made in the airline, the return is more than 15,000 per cent.

Analysts said the headline figures looked remarkable, but added that Virgin Group’s finances and investments were treated with caution because it was a private company.

And Jon Moulton, managing partner of Alchemy, the venture capital company, said: “If the figures are straight then it is an amazing level of return. I’ve not done many of those (sort of deals).”

Patrick Corp, the transport group which had 50 per cent before the float, will have a stake of 45 per cent. Virgin said it would keep its 25 per cent stake, down from 46 per cent, as a long-term investment. About 30 per cent will be held by institutional and retail investors, and employees.

Virgin Blue, with about 28 per cent of the domestic airline market, is seen as a serious rival to Qantas, and has plans to expand to New Zealand and the South Pacific.

Mr Whitehorn said that Virgin Group had three main projects for 2004: launching Virgin Mobile in Canada; starting a budget airline in America; and acquisitions in aviation and financial services.

Blue heaven

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