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Virgin Money shares fall after US billionaire sells off remaining stake

Published 17/11/2016

The sale comes after Virgin Money shares have risen nearly 65% since being battered in the immediate fallout of the Brexit vote
The sale comes after Virgin Money shares have risen nearly 65% since being battered in the immediate fallout of the Brexit vote

Virgin Money has seen its shares tumble into the red after American billionaire Wilbur Ross offloaded his remaining 12% stake in the lender for £171.5 million.

It was almost double the shares his private equity firm WL Ross & Co had previously planned to sell, having gradually reduced its stake since 2014.

WL Ross had been the bank's second largest shareholder after Sir Richard Branson's Virgin Group, which currently holds a 35% stake in the business.

WL Ross said: "Following strong demand, WL Ross decided to upsize the transaction. On completion of the placing, WL Ross will not hold any shares in Virgin Money."

The firm, which had previously planned for a 27 million share placing, sold the rest of its 53.6 million shares at 320p each.

The news sent Virgin Money shares lower by 6.3% in midday trading.

Virgin Money declined to comment.

The US billionaire originally took a 21% stake in the business in 2010, raising the shareholding to 45% after Virgin Money acquired Northern Rock in 2012.

That stake was later reduced to 33.5% following Virgin Money's London flotation in 2014 - when the lender was valued at £1.25 billion - and WL Ross had cut its holding to 12% by the end of 2015.

Investec banks analyst Ian Gordon said: "Clearly we do not know the precise rationale for the timing of WL Ross' exit, though Virgin Money shares have now rallied by 65% from a trough on 205p on 7 July 2016."

Shares plummeted in the wake of the Brexit vote and, despite the recovery, are still trading lower than their pre-referendum high of 366p.

Mr Gordon said while the business has delivered "extraordinary levels of growth" across its mortgage and card portfolios, there were reasons for "slight caution".

He added: "After more than a year of broad stability, Bank of England Quoted Household Interest Rates on a 2-year fixed rate mortgage have fallen sharply from 1.91% in May to 1.51% in October, while the outlook for Net Interest Income remains robust, Virgin Money's own guidance for Other Income has softened to 'flat'."

Mr Ross is reportedly being eyed for a position in Donald Trump's government.

Fellow billionaire investor Carl Icahn said in a tweet this week that the president-elect was considering Mr Ross for the position of US commerce secretary.

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