Virgin Wines plans £100m float next month

Virgin Wines plans to float on London’s junior Aim market next month targeting a £100m valuation, after a surge in demand for its home delivery service during the pandemic.

The online wine retailer, which licenses its brand from Sir Richard Branson’s Virgin empire, offers wines mainly through two subscription schemes and has about 169,000 active customers in the UK, the company said on Tuesday.

Demand for home wine deliveries has been boosted by rolling pub and restaurant closures since the UK first locked down in March last year to stem the spread of Covid-19.

Virgin Wines plans to invest in growth opportunities, including its newly formed beer and spirits unit, and pay down its debts. The company said the off-trade market for wine specialists was worth £2.4bn last year.

Jay Wright, chief executive of Virgin Wines, hailed a year of “strong, consistent growth” for the company in 2020 thanks to “a unique wine sourcing model and a loyal customer base”.

“Underpinned by the strength of our customer proposition as well as the benefit of many positive consumer trends, we have a clear strategy to continue this growth over the coming years,” he added.

In 2013, Wright led a £15.9m management buyout of the company, eight years after the brand was first sold by the Virgin Group, backed by private equity groups Connection Capital and Mobeus Equity Partners.

WineBank and Wine Plan, the company’s two subscription schemes, made up more than half of its £56.6m annual revenue for the year to June 30 2020. Earnings before interest, tax, depreciation and amortisation came to £4.8m over the same period, the group said.

In the six months to December 2020, revenues jumped 55 per cent year on year to £40.6m with ebitda up 196 per cent to £4.5m.

Listed rival Naked Wines reported annual revenues of £202.9m for last year. Since the start of the pandemic, its shares have almost quadrupled giving it a market value of about £585m. The stock was down about 1.5 per cent on Tuesday.

The announcement follows a flurry of stock market flotations in London from companies that have been boosted by consumers’ migration online during the pandemic, including retail and technology company The Hut Group and greeting cards retailer Moonpig. Both soared on their debut as investors embraced the online boom.

Miles Beale, chief executive of the Wine and Spirit Trade Association, said Virgin Wines was likely to benefit as consumers’ shift to online purchases endured beyond the pandemic. “The trend towards more online-ordered, home-delivered supply is highly likely to continue even after the hospitality sector reopens,” he said.

“In practice sales via these channels have seen growth for some time, but this trend has accelerated rapidly during the past year. And, while it is likely to slow again — and indeed reverse, the trend is here to stay.”