Virgin Group founder Sir Richard Branson has picked Sydney for the new headquarters of his new Australian Virgin Money venture, which will offer credit card and online banking products in associate with US banking giant Citibank.
But while Branson was in Sydney to announce the new Virgin Money headquarters, he was also making headlines on the other side of the world, after reports emerged in Britain that Virgin Group is considering selling the Virgin Active chain of health clubs for more than $2 billion.
The NSW Government says the new Virgin Money headquarters will help create 150 jobs over seven years as the new joint venture with Citibank ramps up.
Virgin Money will also expand its superannuation business headquarters, which will be located in the NSW regional town of Wollongong.
Virgin Money currently has around 25 Australian staff, based in Sydney.
Branson, who is also expanding the Virgin Money business in Canada, said in an interview with Dow Jones yesterday that Virgin Group was keen to push outside of Britain with Virgin Money, which has been growing quickly in recent years.
Virgin Money’s Australian expansion is tipped to start with credit cards and an online banking division that is likely to look something like ING’s highly successful online banking service. The joint venture is also expected to enter the mortgage market.
As is typical with Virgin products, low fees and attractive rates are expected to be a big part of the company’s initial marketing push.
However, the Virgin Money has not been as successful as Branson would have liked during its history in Australia.
Virgin Money’s previous credit card deal with Westpac came to an end in 2008, when the 750,000 Virgin customers were moved to Westpac after the bank paid Virgin Money $39 million.
Virgin Money exited the mortgage sector in 2008 as a result of the global financial crisis and has retained a small superannuation and insurance business.
While Virgin Money might be Branson’s main focus during his Australian trip, cash of a different kind appears to be very high on the agenda back in the UK.
Britain’s Telegraph newspaper is reporting that Virgin Group has held discussions with private equity firms KKR, Blackstone, Advent and CVC regarding a £1 billion sale of the Virgin Active gym.
Branson is also reportedly examining the option of floating the business.
While Virgin Active remains small in Australia – it has just two clubs open, in the Sydney suburb of Frenchs Forrest and Melbourne’s CBD, with another planned for Sydney’s CBD soon – it has a large presence in Britain, Italy, Spain, Portugal and South Africa, with 187 clubs and more than one million members.
Virgin Active expects to post profits of $197 million this year, according to reports.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
