Virgin Mobile was today valued at £500 million as it launched on the stock market at a price significantly lower than its previous hopes.

The company - part of Sir Richard Branson's business empire - overcame tough markets to issue shares at 200p each - below the original 235p-285p price range.

But this improved to 206p as investors warmed to the stock when conditional dealings began this morning.

The listing of the UK's fifth largest mobile phone group is the first by part of Sir Richard's empire in London for 18 years.

It comes hot on the heels of another debut by Branston pickle-owner Premier Foods yesterday, whose shares started trading at the bottom of its price range.

Sir Richard said: "We are very happy that Virgin Mobile is floating on the London Stock Exchange, particularly given the difficult markets which have seen several other IPOs (initial public offerings) abandoned this year."

Virgin Mobile's flotation is set to raise around £125 million and will fund expansion within the Virgin Group of businesses, which includes airlines, music stores and credit cards.

If investor demand is high enough, the company will add another 6.25 million shares to the 62.5 million already on offer.

Employees are set for a windfalls of up to £1,400 as Virgin has pledged to make a gift of free shares following the listing.

The operation employs 1,400 staff at three sites - Trowbridge, London and Daventry - and has acquired around 4.1 million customers.

Virgin Mobile was founded five years ago and differs from rivals such as Vodafone and mm02 as a "virtual operator" which uses the network of T-Mobile.

Around 95% of its business is derived from customers buying pre-pay vouchers to top up the credit on their mobile phones.

In the year to March 31, it generated turnover of £453.3 million and operating profits of £63.2 million.

Although today's flotation gave the company a market value of £500 million, its enterprise value is £811 million after taking account of £311 million of debt.

When news of the listing first emerged last month, it was thought the company would have a market value of up to £713 million.

Wednesday July 21, 2004