The bank’s free float is projected to raise £150m with a 25% issued share capital of the company.
The statement said: “The offer and admission will support the company’s growth plans and common equity tier 1 capital ratios, give the Company access to a wider range of capital-raising options and further improve the ability of Virgin Money to recruit, retain and incentivise its key management and employees.”
Part of the net proceeds of the offer will also be used to repay HM Treasury for its acquisition of Northern Rock in January 2012 with a £50m payment due to HM Treasury.
When Virgin Money agreed to buy Northern Rock in late 2011, it was agreed that this payment would be made in the event of a successful IPO of the combined businesses before the end of 2016. This payment will take the total paid by Virgin Money to HM Treasury for Northern Rock plc to £1.02bn.
It said: “The offer will also provide the selling shareholders with an opportunity for a partial realisation of their respective shareholdings in the Company.”
Admission is expected to take place this month leading to inclusion in the FTSE UK.
The flotation prospectus will be out shortly.
The mortgage lender confirmed a 1.6% mortgage market share and 1.4% share of savings, alongside 1.8% credit card share to June 2014.
On its growth plans, Virgin said: “There is also an opportunity for Virgin Money to grow its net interest margin as it builds its credit card business and broadens its mortgage product range within its conservative risk appetite.”
The Company’s underlying net interest margin has improved from 0.54% in 2012 to 1.26% in 2013 and to 1.43% for the six months ended 30 June 2014.
Virgin Money chief executive Jayne-Anne Gadhia confirmed each employee would receive £1,000 worth of shares in the business when the flotation was completed later this month.
Gadhia told the BBC: “Debts to the taxpayer have in every sense been fully repaid. The taxpayer has got their money back.”
Sir Richard Branson said: “This is a huge day for Virgin Money. We started this company 20 years ago with Jayne-Anne Gadhia when we set out to challenge the financial services industry.
“Our wonderful team have come a long way since then and have built a strong and valuable business offering great value products and services and a real challenge to the established players.”
