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Virgin Money ‘still plans IPO by end of year’

  • Volatile markets prompt Virgin to delay flotation
  • Staff still expect £1,000 of free shares by end of year

Virgin Money has decided this morning to postpone its planned flotation because of volatility in stock markets, though banking sources believe it still intends to list by the end of the year.

The listing of 25% of the company was expected to value Sir Richard Branson’s Edinburgh-based bank at about £2 billion in an initial public offering (IPO) by the end of this month.

It wants to raise £150 million for expansion and to pay off £50 million owed to the government in relation to the £1.02 billion acquisition of Northern Rock.

All 2,800 staff who were looking forward to a pre-Christmas bonus of £1,000 in free shares will now have to wait in the hope that the IPO still goes ahead in the coming weeks.

In a statement to the London Stock Exchange this morning, Virgin said it  “continues to progress its plan for an initial public offering, mindful of market conditions. It now expects admission to occur later than October 2014 and as soon as constructive market conditions allow.”

Jayne-Anne Gadhia, chief executive, said:  “Virgin Money continues to perform strongly and we remain focused on delivering a successful initial public offering as soon as market conditions allow.”

Virgin said in its announcement to float on 2 October that its strong capital position and franchise will allow it to adopt a “progressive dividend policy” and it intends to pay a dividend in its first full financial year following admission. It said that over the last three years it has transformed the business by expanding the  product range, increasing customer numbers, growing the balance sheet and enhancing profitability.

In the first half of 2014 Virgin reported an underlying profit of £59.7m, against £53.4m for the whole of 2013. In 2011, Northern Rock made an underlying loss of £111m for the full year.

Virgin has 2.8 million customers, 75 stores and five customer lounges. Since acquiring Northern Rock it has created 450 jobs.

Virgin’s decision comes as markets fall and the appetite for new issues has all but dried up. Aldermore Bank pulled its £800 million flotation that was due to take place today. No new date has been announced. Miller Homes has also delayed its planned listing.

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