Virgin Money to float on the stock market with a market value of around £2 billion
Virgin Money has announced today (2 October 2014), its intention to float on the London stock market, valuing the company which provides mortgages, savings and credit cards to 2.8 million customers at £2 billion.
The shares which are expected to start trading later this month will only be made available to big financial institutions first, with private investors having to wait to invest. Virgin will give each of its 2,500 employees £1,000 worth of shares when it floats.
Virgin Money which is owned by Sir Richard’s Virgin Group, Wall Street billionaire Wilbur Ross and an Abu Dhabi investment fund expect to raise £150 million in the float by selling a 25 per cent stake in the Virgin Money. If analysts’ expectations are correct in valuing the group between £1.5 billion and £2 billion this will mean a total of £375 million new and existing shares will be sold in the float.
The announcement of the float follows last months’ financial update where underlying profits jumped to £59.7million in the first six months of the year, up from £13.1million a year earlier. The successful completion of the offer will lead to a final payment of £50 million being made to HM Treasury by Virgin Money in respect of the contingent consideration payable as part of Virgin Money’s acquisition of Northern Rock plc.
When Virgin Money agreed to buy Northern Rock plc in late 2011, after a taxpayer bailout it was agreed that this payment would be made in the event of a successful IPO of the combined businesses before the end of 2016. This payment will take the total paid by Virgin Money to HM Treasury for Northern Rock plc to £1.02 billion.
Jayne-Anne Gadhia, Chief Executive Officer of Virgin Money, said: “We are delighted to be announcing our intention to float Virgin Money. Over the last three years we have transformed our business. We have expanded our product range, increased our customer numbers, grown our balance sheet and enhanced our profitability.
“Our decision to take the business public marks just how far the Company has come. We look forward to being a listed company and remain committed to delivering positive outcomes for all of our stakeholders. Our capability to deliver growth at meaningful scale, the quality of our balance sheet and our absence of legacy issues makes us stand apart from other banks, and these strengths give us the potential to deliver ongoing returns to our shareholders through both capital growth and progressive dividend payments.
“In addition, and in recognition of their hard work to-date and their contribution to the future value of the business, I am also delighted to announce that each employee will be awarded £1,000 worth of shares in the business upon flotation.”
Sir David Clementi, Chairman of Virgin Money, said: “I am pleased we have reached the point where Virgin Money is ready to start life as a listed company. We have built a safe, sound and secure bank supported by a strong Board. The Company has an extremely positive future and I am delighted the business is in such a good position.”