Richard Branson's Virgin Money is floating

The challenger bank is looking to raise £150m with a London IPO.

by Rachel Savage

Richard Branson’s Virgin Money fired the starting gun on its heavily trailed IPO today, announcing plans to raise around £150m with a listing on the London Stock Exchange.

The 75-branch bank, which is 47%-owned by Branson’s Virgin Group, bought up the ‘good’ assets of Northern Rock with US investor WL Ross in November 2011 after it collapsed in 2007.

After the IPO, it will pay another £50m to the Treasury, taking the total it has handed over for the bailed-out bank’s good bits to £1.02bn. The ‘bad’ assets from the £1.4bn rescue are now returning profits to government too, so good news for the taxpayer all round.

The company said it plans to have a free float of at least 25% of shares (the minimum for a plc under UK regulations). That means both Virgin Group and WL Ross, which owns 45% of the business, will sell down part of their stakes. Staff will also get £1,000 worth of shares each – naww.

Virgin Money will be the fourth so-called challenger bank to float this year, after Lloyds hived off TSB, One Savings listed in June and Aldermore announced IPO plans last week. It will also make chief exec Jayne-Anne Ghadia, who has been at the helm since 2007, the first women to lead a publicly listed bank.

The bank, which has 2.8 million customers and 2,800 staff, reported pre-tax profits of £59.7m in the first half of the year last month, up more than four-fold from £13.3m in 2013. Revenue in the same period rose more than 28% to £210m.

If the float, rumoured to be aiming for a total valuation of £2bn, comes off successfully, it will vindicate Branson’s decision to ride in as Northern Rock’s knight in shining armour. Looks like a better business decision than offering his staff unlimited holiday anyway…

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