As fas as I notice from the official IBM Cloud documentation “VPC responsibilities“, there is no official support for a nested Hypervisor listed in the official IBM Cloud documentation (Date 14.09.2021). IBM provides in the official IBM Cloud documentation: How to manually enable nested virtualization on a virtual server instance?, but you can do this on your own risk, as far as I understand for now. For me the nested Hypervisor worked for several times, but it’s not official supported.
This is a cheat sheet about, how to setup a virtual machine or virtual appliance in an IBM Cloud virtual private cloud (vpc) on a virtual server instance (vsi) with Red Hat Enterprise Linux 8 minimal install (RHEL8) as host operating system and a Ubuntu Linux operating system for the virtual machine or virtual appliance. I reuse different blog posts and references to documentations on IBM Cloud or Red Hat and I use the information from an exchange with Stefan Trimborn and Marc Haecker. (Thanks and greetings Stefan and Marc ;-))
This blog post covers the setup until the network configuration for the virtual machine (vm) or virtual appliance (va) to access for example a web application from the internet, which runs in the vm or va.
The image below shows a simplified diagram of the setup on IBM Cloud: