Virgin Money has been forced to lower its valuation for its revived initial public offering as it seeks to float on the London market by the end of this month.
The Newcastle-based lender, which is part-owned by Sir Richard Branson and US billionaire Wilbur Ross, will price its shares at 283p-333p, giving an implied valuation of £1.25bn-£1.45bn.
The new price range undershoots the previous valuation of £2bn that the bank was expected to achieve.
The lender, which has 75 branches and customer lounges, had originally planned to list in October, but postponed the IPO only days after Aldermore cancelled its flotation due to volatile stock markets.
Virgin Money then decided to press forward this week – just days after the crash of the test aircraft owned by Virgin Galactic, another company partly owned by Sir Richard Branson. Virgin America, the US airline also partly owned by Sir Richard, launched a prospectus on Monday for listing in New York.
On Tuesday, a spokesperson for Virgin Money said the bank could “move forward” with the IPO as market conditions had become more stable.
The push to revive the planned listing was also spurred by the Bank of England’s decision on the leverage ratio– a measure of the capital banks have to hold versus total assets.
The BoE said UK banks would have to hold capital equal to 4.05 per cent of assets from 2019, above the current 3 per cent requirement.
Ian Gordon, analyst at Investec Securities, said the level of the ratio was “very good news” for banks, as some feared a higher ratio could constrain lending and hit building societies in particular.
“We welcome the clarity provided by the Financial Policy Committee on the leverage ratio, and are pleased to note that we operate in excess of the recommended requirements,” said Jayne-Anne Gadia, chief executive of Virgin Money. The bank had a leverage ratio of 3.8 per cent at the end of June.
Sir Richard and Mr Ross are poised to offload a portion of their shares. The UK government is also set to receive £50m due to a deal agreed when Virgin acquired assets of defunct lender Northern Rock for £747m.
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