Virgin Money Lures Major Blue-Chip Backers

One of the biggest shareholders in the challenger bank Aldermore has placed a significant bet on the growth prospects of Virgin Money, the fast-growing lender whose flotation triggered a £50m windfall for UK taxpayers.

Sky News understands that Toscafund, the investment manager, is among a group of blue-chip backers which bought shares in Virgin Money ahead of its initial public offering (IPO) in London on Thursday.

Fidelity Investments, Henderson, Kames Capital, M&G Investments and Standard Life Investments also acquired stock in the banking arm of Sir Richard Branson's business empire, according to institutional shareholder sources.

Virgin Money priced its shares at the bottom of an indicative range, reflecting recent volatility in financial markets.

The flotation valued the company, which sponsors the London Marathon, at £1.25bn, just weeks after it had delayed its plan to go public.

Sky News revealed earlier this month that the Bank of England's announcement about bank capital requirements had provided Virgin Money's board with renewed confidence about its prospects as a listed company.

Aldermore also postponed its flotation because of volatile equity markets but may reconsider in the light of Virgin Money's successful IPO.

The company's shares closed flat on Thursday after initially rising after their stock market debut.

In a prospectus also published on Thursday, Virgin Money echoed recent remarks by Virgin America, the domestic US airline, that its strategy "relies significantly on the strength and appeal of (its) brand".

"Virgin Money is exposed to the risk that others associated with the Virgin brand bring the brand into disrepute which may have a negative effect on the reputation and the strength of the Virgin brand and may have similar consequences on the Virgin Money brand," it said.

Insiders said there had been no adverse reaction from investors following the recent crash of a Virgin Galactic test flight in California.

Sir Richard's Virgin Group and WL Ross Investments, a vehicle headed by the US billionaire Wilbur Ross, continue to collectively own a majority of the bank following its flotation.

Its IPO is likely to be the last major listing before the end of the year.

Virgin Money declined to comment on its new institutional shareholder base.