LONDON — Virgin Entertainment tycoon Richard Branson has sold 33% of V2 Records, his young record company, to the McCarthy Corp. for $90 million.
The cash, which is payable in equal stages over 40 months, gives the growing label a war chest for expansion and artist signings. It will also use the funds to acquire minority stakes in other indie record companies.
At present, V2’s 40-act roster consists primarily of up-and-coming talent, but the label boasts a number of key alignments with credible indie record labels.
The Canada-based McCarthy, a leisure and technology company owned by brothers Rory and Tim McCarthy, has previously invested in Branson’s Virgin clothing and cosmetics interests.
The deal with V2 includes a $16 million two-year debt facility. Both of the McCarthys — who are friends of Branson — also become non-executive directors of V2.
“Richard Branson’s credentials in the music world are impeccable, and we are delighted to be able to participate in the development of what we are sure will become a highly successful international music and publishing business,” said Rory McCarthy.
Branson, who also owns Virgin Atlantic Airlines, welcomed McCarthy’s “depth of financial and corporate experience,” adding that he was “looking forward to working together to build V2 into the best independent music group in the world.”
Branson officially launched V2 in December 1996, and has made a number of joint-venture and production deals, including pacts with GeeStreet, Big Cat and Flydaddy Records. V2 execs, who inked a distribution deal with BMG in March, have also won a number of bidding wars for talent.
Branson sold his previous record company, Virgin, to EMI in 1992 for $916 million. The deal stipulated that he could not re-enter the music biz for a period of 30 months.