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Three years after Northern Rock, A&O and Freshfields lead on Virgin Money IPO

Magic circle duo Allen & Overy (A&O) and Freshfields Bruckhaus Deringer have won roles to advise Virgin Money on its forthcoming London initial public offering (IPO).

Sir Richard Branson’s retail banking arm has announced it will raise £150m from its London Stock Exchange listing to facilitate the company’s development, boost capital and support growth plans including recruitment and staff retention.

A&O is advising Virgin Money, led by corporate partners Andrew Ballheimer and David Broadley, while Freshfields is advising the underwriters, led by corporate partners Mark Austin and Julian Makin.

Bank of America Merrill Lynch and Goldman Sachs are joint sponsors, joint global co-ordinators and joint bookrunners, while Barclays Bank and Citigroup Global Markets are joint bookrunners, and Keefe, Bruyette & Woods is the joint lead manager.

Virgin Money, which acquired a part of lender Northern Rock from the Government in 2011, will sell a portion of its existing holding of ordinary shares, and an offer of new ordinary shares to be issued by the company. The offer is expected to result in a free float of at least 25%.

The bank will also return £50m of the proceeds to HM Treasury as part of its payment agreement for its acquisition of the ‘healthy’ part of Northern Rock in 2012. A&O’s Ballheimer also advised Virgin Money on that deal, while Freshfields advised Northern Rock.

Virgin Media said ‘the net proceeds of the offer will also be used for general corporate purposes as well as to satisfy the payment due to HM Treasury in respect of the contingent consideration payable as part of the company’s acquisition of Northern Rock in January 2012’.

Virgin Money is the latest of a string of British banks, or ‘challenger banks’, to announce their intention to list after Aldermore, OneSavings and TSB also opted to float earlier this year. These listings come as these British banks seek to acquire a larger chunk of the retail banking market from UK’s major financial lenders.