Billionaire Wilbur Ross sells down Virgin Money stake

Two backers of Virgin Money are aiming to sell a stake of at least $277m (£187m) after shares in the challenger bank soared nearly 50 per cent only five months after listing on the London stock market.

Funds run by US billionaire Wilbur Ross and Stanhope Investments were seeking to offload 45m of shares, it emerged on Tuesday afternoon, although this increased to 60m shares, according to people familiar with the situation.

The sale is likely to be priced at 400p a share, marking a sharp increase from its initial public offering price of 283p in November last year.

Mr Ross currently holds a 33.5 per cent stake in Virgin Money, worth about £620m, while Stanhope owns 4.4 per cent in the bank.

The timing of the share sale comes during a window of opportunity ahead of the UK general election in May.

But it comes before the end of a lock-up period expires, before which time institutional investors are generally unable to sell shares. However, the listing prospectus states that the bookrunners on the deal can waive the lock-up, which was due to end in mid-May.

Analysts at Numis Securities had previously suggested that the "recent share price performance increases the probability of a selldown after the institutional lock-up period".

Although the practice of waiving a lock-up is considered by some market commentators as controversial, the recent stellar performance of the share price is expected to allay any investor concerns.

Jayne-Anne Gadhia, chief executive of the bank, told the Financial Times: "We are delighted that we continue to have such supportive shareholders and strong demand for Virgin Money shares."

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Virgin Money, which was forced to postpone its listing after jittery equity markets in October, saw profits more than double last year. The Sir Richard Branson-backed lender reported a 127 per cent increase in underlying profit before tax in 2014, ending the year at £121.2m.

The bank saw mortgage balances increase to £21.9bn last year, up 11.8 per cent, while net lending rose to £2.3bn.

The sale also comes amid speculation that other private equity backers of challenger banks are eyeing further disposals on the back of strong share price performance.

JC Flowers, the private equity firm that owns 58.5 per cent of OneSavings Bank, may be seeking to offload further stock to meet strong demand from shareholders, according to people familiar with the situation.

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