Sir Richard Branson has agreed to sell shares worth around 500 million US dollars (£405 million) in his Virgin Galactic space business to raise funds for his struggling airline and leisure businesses.

The businessman, who has previously suggested he would be willing to remortgage his private Caribbean island home on Necker Island to raise funds, said the cash would be reinvested into firms including Virgin Atlantic.

Announcing the plans via the New York Stock Exchange, Virgin Group said it would sell 25 million shares via Credit Suisse, with the process expected to cost the business 167,000 dollars (£135,400).

The shares, sold via Sir Richard’s British Virgin Islands-based shell company Vieco 10, account for around a fifth of the billionaire’s stake in the space tourism business.

Virgin Group said: “We will not receive any of the proceeds from any sales of common stock by Vieco 10 pursuant to the distribution agency agreement.

“Vieco 10 is a subsidiary of Virgin Group. Virgin Group intends to use any proceeds from sales of our common stock pursuant to the distribution agency agreement to support its portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of Covid-19.”

It comes a week after Virgin Atlantic announced plans to cut more than 3,000 jobs and end its operation at Gatwick.

The airline said it will reduce its workforce by 3,150 people – equivalent to more than a 30% cut.

Virgin Atlantic’s flights from Gatwick – grounded due to the collapse in demand caused by the coronavirus pandemic – will not restart. Some routes will be switched to Heathrow.

Chief executive Shai Weiss said at the time the carrier must take steps to “reduce our costs, preserve cash and to protect as many jobs as possible”.

He added: “I wish it was not the case, but we will have to reduce the number of people we employ.”

Sir Richard has previously warned the carrier will collapse unless it receives Government support.

Before the coronavirus pandemic, Virgin Atlantic operated flights from Gatwick to destinations such as Orlando, USA; Havana, Cuba; and Montego Bay, Jamaica.

Rival airline British Airways announced earlier this month it was planning to cut 12,000 jobs, and it also emerged it is considering closing its Gatwick base.

Carriers around the world have grounded the majority of their planes due to the lack of demand for air travel caused by the pandemic.

Virgin Atlantic also announced it will not return to using its seven Boeing 747-400 aircraft, which have four engines.

By 2022 it will operate a “simplified, greener fleet” of 36 twin-engine aircraft, which are more fuel efficient.

Meanwhile, 15% of the retail estate used by Virgin Holidays will close this year, and the travel firm will be renamed Virgin Atlantic Holidays.

Sir Richard previously owned around 10% of Virgin Australia, but saw that airline collapse into administration last month.