A new bank joined the London Stock Exchange on Thursday, Nov. 13, as Virgin Money Holdings (UK) plc priced its long-awaited IPO at the bottom of an indicative range to raise proceeds of at least £312 million ($492.2 million) for the company and its selling shareholders.
The WL Ross & Co. and Richard Branson-backed consumer lender priced its shares at 283 pence in an IPO which will raise £344 million if a greenshoe is used and which values all of Virgin Money's equity at about £1.25 billion. That market capitalization is well below the £1.47 billion value that a top-of-the-range pricing would have commanded and well below £2 billion that Virgin Money's backers were reportedly initially seeking. The shares opened at 286 pence as trading began.
The selling shareholders will receive at least £162 million of proceeds and the company itself will receive £150 million from the sale of new stock. Before the greenshoe, a quarter of the company will be in free float. Branson's vehicle will hold 34% and WL Ross will own 33% and both will be barred from selling down their remaining stakes for 180 days.
Virgin Money resurrected its IPO earlier this month after temporarily pulling the plan in October amid equity market volatility. CEO Jayne-Anne Gadhia said Virgin Money will make a final £50 million payment to the government, from which it bought the "good" part of bailed-out lender Northern Rock plc in 2011. That will take its total payment to more than £1 billion.
Virgin Money follows JC Flowers & Co.'s OneSavings Bank plc and Lloyds Banking Group plc (LYG) spin-out TSB Banking Group plc to the London market, with several other consumer and small-business lenders waiting in line to float.