Branson's PEP brings in £42m

The Virgin personal equity plan, Richard Branson's first venture into financial services, pulled in £42m between the launch date on 3 March and the end of the tax year on Wednesday night,Virgin's marketing manager Tony Wood said yesterday.

He said he was "thrilled", although no firm sales targets had been set.

The final application before the end of the tax year arrived by motorcycle courier at 10.30 on Wednesday night. Around 40,000 telephone enquiries were received and some 9,000 individual plans were sold, a remarkably high "conversion" rate of almost one in four, compared with an industry- wide average of one in 50.

Together with the average of £4,500 for each purchase, the high conversion factor suggests relatively sophisticated investors with substantial cash who knew what they wanted in a PEP, rather than novices with the minimum £1,000 to invest.

The 5 per cent rise in the FT-SE All Share Index over the last month and the seasonal ballyhoo about taking advantage of tax-efficient investments before the end of the tax year will have helped to ensure that Richard Branson's latest brainchild got off to a good start.

However, the overall investment climate for PEPs is still less attractive than it was a year ago, when more than £1.6bn net was poured into PEPs in the first quarter alone, a figure that fell back to little more than £600m in the fourth quarter of 1994.

Virgin hopes that demand will not drop away sharply now the new tax year has begun, but will be sustained by demand from PEP holders put off by high initial charges for conventional PEPs, who will turn to Virgin for their 1995/96 allowance.

The value of the Virgin PEP has risen by 5 per cent in the first five weeks, although as the fund is a tracker, structured to follow the All Share Index, this only reflects the underlying rise in the index since the launch date.

Virgin's telephone sales office in Norwich also claims to have had many enquiries about the timing of additional financial products, especially the regular savings PEP, which is expected to be launched in June.

Other products in the pipeline will include a gilts PEP, investing in high-yielding British government stocks to generate a high income; a global PEP invested in the main overseas stock markets and tracking the leading stock market indices in New York, Tokyo, and possibly Frankfurt and Paris; and perhaps a corporate bonds PEP investing in high-yielding fixed interest stocks issued by companies and in convertible stocks.