Wilbur Ross’s Firm Exits U.K.’s Virgin Money With Stake Sale

  • Virgin Money shares decline the most since July in London
  • Billionaire Ross acquired a stake in challenger bank in 2010

WL Ross & Co., the investment firm managed by billionaire Wilbur Ross, raised 171.5 million pounds ($214 million) by selling its remaining 12 percent stake in Virgin Money Holdings UK Plc. Shares in the British challenger bank fell the most in four months.

The New York-based money manager doubled the size of the stake it had originally planned to sell to about 54 million shares at 320 pence apiece after strong demand from investors, according to a statement on Thursday.

Virgin Money, a lender started by fellow billionaire Richard Branson, was down 6.3 percent to 317.3 pence at 11:22 a.m. in London trading. The company, led by Chief Executive Officer Jayne-Anne Gadhia, is among the U.K.’s so-called challenger banks backed by hedge- and private-equity funds that have emerged since the financial crisis. Ross, who scoured Europe for finance assets after the crash, agreed to buy a stake in the bank for 100 million pounds in 2010.

“While this may therefore satisfy some of that demand in the short-term, the share price will ultimately be determined by the fundamental outlook for the group, which we think is supportive of a higher valuation,” Gary Greenwood, an analyst at Shore Capital with a buy rating on the shares.

Bank of America Corp. and Goldman Sachs Group Inc. sold the shares on behalf of Ross’s firm, according to the statement. Ross and Simon Hall, a spokesman for Virgin Money, didn’t comment.

Ross, who committed more funds to Virgin Money after his first purchase, began selling his firm’s stake with the lender’s 2014 initial public offering. Sales included 45 million shares in April 2015 at 400 pence each for 180 million pounds, and then 50 million shares at 405 pence apiece for 203 million pounds five months later.

Virgin Money’s earnings next year will be reduced by bond repayments and new expenditure, while mortgage interest rates have fallen since May, Ian Gordon, an analyst in London with Investec Plc, wrote in a note to clients. These are reasons for “slight caution,” wrote Gordon, who has a hold rating on the shares. The stock has declined 17 percent this year, though has recovered 15 percent since since being hurt by Britain’s vote to leave the European Union.

Ross also invested in lenders in Ireland, Cyprus and Greece after the crash. In 2014, he sold his stake in Dublin-based Bank of Ireland Plc for a profit of about 500 million euros ($535 million).

Ross is U.S. President-Elect Donald Trump’s leading candidate for Secretary of Commerce, Politico reported Tuesday. The investor is also among possible candidates to be Secretary of the Treasury, according to people familiar with the process.

    Before it's here, it's on the Bloomberg Terminal.