Virgin Money IPO attracts major blue-chip backers

on Nov 14, 2014
Updated: Apr 9, 2020
Listen, Friday, November 14: The initial public offering (IPO) of Virgin Money Holdings Plc (LON:VM), the challenger bank part-owned by billionaire investor Richard Branson, attracted a group of blue-chip backers, including an investment manager with a stake in rival lender Aldermore, Sky News has reported.

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Shares in Virgin Money which floated on the London Stock Exchange yesterday have inched lower on their second day of conditional trading before the lender is formally admitted to the LSE’s Main Market next week.
*h*Blue-chip backers invest in Virgin Money share offer*h*
Sky News reported yesterday that Toscafund, an investment manager which holds a large stake in rival bank Aldermore, was among a group of blue-chip backers which bought shares ahead of the Virgin Money IPO.
Unidentified institutional shareholder sources told the newswire that Fidelity Investments, Henderson, Kames Capital, M&G Investments and Standard Life Investments had also acquired stock in the banking arm of Branson’s business empire.
Virgin Money yesterday priced its IPO at 283p per share, at the lower end of its initial guidance. (Virgin Money IPO values challenger bank at £1.25 billion) The pricing reflects the recent volatility in equity markets which last month delayed Virgin Money’s IPO and prompted Aldermore to drop its own listing.

*h*Virgin Money share price update*h*
Virgin Money’s share price has inched lower in today’s trading, having shed 0.09 percent to 282.75p as of 14:32 GMT, below the float price of 283p. The shares climbed at the start of conditional trading yesterday but lost ground later in the session to close broadly flat at 283.42p.
Michael Hewson, chief market analyst at CMC Markets, told the Financial Times that investors were experiencing a degree of ‘IPO fatigue’.

“”The market’s been cooling for a while””
“The market’s been cooling for a while – the fact [Virgin] pulled out in October is quite telling, Hewson added. “Pricing at the bottom end of the range tells me investors are becoming a lot more realistic about valuations.”
The newspaper also quoted analysts as saying that investors were wary of the ability of new banks to actually ‘challenge’ incumbents.

Rob James, an analyst at Old Mutual Global Investors, told the FT that challengers needed to “be different in some way” to compete and take business which would otherwise go to large incumbent banks. 
Andrea Leadsom, economic secretary to the Treasury, however, welcomed the listing, noting that it was “great to see market challengers like Virgin Money building their business and taking on the big banks,” as quoted by The Times.


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