Virgin Money unveils flotation
Virgin Money, the Edinburgh and Newcastle based bank, has this morning confirmed that it will float its shares on the London Stock Exchange to raise £150 million.
The company is floating 25% of the business this month which is expected to value it at about £2 billion. All 2,800 staff will receive £1,000 of free shares.
It will use the proceeds to expand its business, strengthen its reserves and pay off £50m owed to the government in relation to the £1.02bn acquisition of Northern Rock in January 2012. Since then it has created 450 jobs.
Virgin said 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.
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
In a statement this morning Jayne-Anne Gadhia, chief executive, said: “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, 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.”