Branson’s big payday nears as Virgin Money prepares to launch flotation

Sir Richard Branson set to cash in from bank flotation. Picture: Getty
Sir Richard Branson set to cash in from bank flotation. Picture: Getty
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Virgin Money is expected to pull the trigger on a £2 billion flotation as early as today after reportedly appointing brokers.

Barclays and Citi are said to be among the bookrunners in the initial public offering, which has been widely anticipated for some time.

The float should provide a bumper payday for Virgin Group founder Sir Richard Branson and American billionaire investor Wilbur Ross, who between them own almost all the equity in the bank.

The UK government should also be in line for some money under the terms of its agreement to sell Northern Rock to Virgin Money, which has key operations in Edinburgh. The lender, headed by chief executive Jayne-Anne Gadhia, paid almost £1bn for collapsed mortgage bank Northern Rock two years ago in a deal that gave it 75 branches, about one million customers and 2,100 employees.

Under the terms of that takeover, the Treasury is in line for an extra payment of up to £50 million following a “successful, profitable” float before the end of 2016.

Virgin Money recently increased the amount of money it has set aside for such an eventuality.

Branson’s Virgin Group is said to be keen to hold on to a large part of its 46.5 per cent stake. Senior executives are also expected to make fortune in the flotation, as the management team owns about 1.6 per cent of the company.

The bank made an underlying pre-tax profit of £53.4m last year and is keen to tap into a booming market for flotations on the London Stock Exchange.