Richard Branson makes bankers millions in Virgin float

Sir Richard Branson and the veteran US investor Wilbur Ross each trousered £70m yesterday, selling part of their stakes in Virgin Money on to the stock market while handing more than £3m to City bankers in the process.

The shares were sold yesterday morning at 283p – at the very bottom of the 283p-333p indicative price range – and ended their first day’s trading unchanged. That values Virgin Money, which includes the old Northern Rock business bought from the taxpayer, at £1.25bn. That was far less than the near-£2bn price tag mooted before the float was postponed last month amid market turmoil after the Scottish referendum.

In its prospectus, controversially only issued last night after unofficial trading began, it emerged that total fees for the float would be £17.3m, including £3.4m to professional advisers like Merrill Lynch and Goldman Sachs.

The small print shows 35 per cent of the company’s mortgages are higher-risk interest- only loans and 13 per cent are on buy-to-let mortgages.

The float means that the Treasury will receive a final £50m payment from Virgin, taking the total it paid for Northern Rock to just above £1bn.

Sir Richard and Mr Ross have pledged not to sell their remaining shares – 34 and 33 per cent of the company respectively – for six months.

Virgin raised £150m of new capital in the share sale.

Staff will be given shares worth £1,000 if they remain with the company for a year after the flotation.