Richard Branson's Virgin Group has sold its stake in V2 Records to U.S. investment bank Morgan Stanley for an undisclosed sum.

Richard Branson's Virgin Group has sold its stake in V2 Records to U.S. investment bank Morgan Stanley for an undisclosed sum.

The bank has been a "significant equity holder" in V2 since 2002, when it converted $128 million in bonds into a 47.5% equity stake in the London-based independent label. As a result of the new deal, Morgan Stanley is understood to now own 95% of V2.

Branson is believed to retain the remaining 5%. According to a V2 statement, Virgin Group will maintain a "long term interest in the company's progress."

The label's existing management under London-based V2 CEO Tony Harlow will "continue to develop and improve the company under its new ownership," the statement adds.

Branson launched V2 in November 1996, four-and-a-half years after the entrepreneur sold Virgin Records to Thorn EMI for £560 million ($804 million).

The record company has since built an international network which claimed revenues in 2005 nearing £50 million ($94 million) with releases from such frontline artists as the Stereophonics, Paul Weller, and Bloc Party. V2 handles Bloc Party in North America on a license deal with Wichita.

In September 2005, V2 Group launched Cooperative Music, a venture which taps V2's resources in sales and distribution to provide indie labels a platform to exploit their repertoire. Not long after, Sheridan Square Entertainment acquired the assets of V2 North America.

The Morgan Stanley deal signals Virgin Group's exit from the recording business. The entertainment conglomerate has "made the strategic decision to rationalize their portfolio of other content led businesses," according to the V2 statement. The sale of the new label follows Virgin Group's deal with cable television operator NTL, through which a one-stop shop for cable television, fixed and mobile telecoms services and broadband Internet will be offered under the Virgin brand.

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