Member Article

Virgin Money confirms intention to float

Virgin Money today announces its intention to proceed with an initial public offering, meaning it is set to become a listed company.

The company intends to apply for admission of its ordinary shares to the premium listing segment of the Official List of the Financial Conduct Authority and to trading on the main market for listed securities of the London Stock Exchange.

It is expected that the offer of new ordinary shares will raise gross proceeds of approximately £150 million and the offer is expected to result in a free float of at least 25%.

The Offer and Admission will support the company’s growth plans, support the company’s common equity tier 1 capital ratios, give the Company access to a wider range of capital-raising options and further improve the ability of Virgin Money to recruit, retain and incentivise its key management and employees.

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, 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.

The UK bank, which boasts 2.8 million customers and 2,800 employees, is primarily focused on providing residential mortgages, savings and credit cards. It also offers a range of investment and insurance products and has recently launched its first personal current account.

It is reported that around 1,800 staff are based in the operational centre at Gosforth, while the others are located in Edinburgh, London, Norwich, Chester and Milton Keynes and across the network of stores and lounges.

At 30 June 2014, Virgin Money had customer deposits of £21.1 billion and loans and advances to customers of £21.0 billion. In the first half of 2014, Virgin Money made an underlying profit before tax of £59.7 million.

Chief Executive Officer of Virgin Money, Jayne-Anne Gadhia, 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.”

Chairman of Virgin Money, Sir David Clementi, 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.”