Wilbur Ross Reduces Stake In Virgin Money Holdings

Wilbur Ross reduced its stake in Virgin Money Holdings, a retail bank offering savings, residential mortgages, credit cards and complementary investment and insurance products to customers in the United Kingdom.

According to the Financial Times, the funds managed by Wilbur Ross and Stanhope Investments are selling 45 million shares of Virgin Money. The stake is worth approximately $277 million or £187 million, which represents 10% of the market capitalization of the retail bank.

Wilbur Ross and Stanhope hold 33.5% and 4.4% stakes in Virgin Money, respectively. The billionaire investor’s stake in the retail bank has a market value of around £620 million. He first acquired his position in Virgin Money in 2010 amid the shake-up of the banking sector in the United Kingdom.

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Wilbur Ross still owns over 25% of Virgin Money after the share sale

After the sale of the shares, Wilbur Ross still owns more than 25% stake in Virgin Money, according to people familiar with the transaction. Bank of America Merrill Lynch (BAML) and Goldman Sachs are managing the sale of the shares.

Wilbur Ross decided to reduce his stake in the retail bank prior to the general elections of the United Kingdom in May.

In 2011, Wilbur Ross’ firm, WL Ross & Co together with Virgin Group led a consortium of investors that provided funding for Virgin Money’s acquisition of Northern Rock from Her Majesty’s Treasury.

Commenting on the share sale, WL Ross & Co. said it remains committed to the long-term growth strategy of Virgin Money. The retail bank’s CEO Jayne-Anne Gadhia told the Financial Times, “We are delighted that we continue to have such supportive shareholders and strong demand for Virgin Money shares.”

Virgin Money stock performance

Virgin Money offered its ordinary stock for 283 pence during its initial public offering (IPO) on November in London. The stock price of the retail bank surged 49% after its IPO.

The shares of Virgin Money closed 422.pence, up by 2.2% in London on Tuesday.

Analysts at Numis Securities previously commented that Virgin Money’s “recent share price performance increases the probability of a sell-down after the institutional lock-up period.” The retail bank’s lock-up period will expire in the middle of May.

Last month, Virgin Money reported that its profits improved significantly in 2014. The retail bank posted a 127% increase in underlying profit before tax to £121.2 million from £53.4 million in 2013. Its net interest margin climbed 24 basis points to 1.50% from 1.26%, and its return on tangible equity grew to 7.4% from 2.3%.