4th Nov 2014 08:37
LONDON (Alliance News) - Virgin Money Tuesday said it will press on with its planned initial public offering, after it had previously delayed when volatility returned to the markets, while River and Mercantile UK Micro Cap Investment company Ltd and drinks mixers company Fevertree Drinks PLC also revealed plans to go public.
The outlook for IPOs had been hit by a volatile October for the equity markets, leading to a number of companies to cancel or postpone their plans to float on the London Stock Exchange. While British lender Aldermore decided against proceeding with its IPO, instead turning to existing private equity investor AnaCap to support the next phase of its development, Virgin Money did not rule out going back to the equity markets to test investor appetite. On Tuesday, the lender said it expects its shares to be trading by the end of November.
Jayne-Anne Gadhia, Virgin Money's chief executive, said the business's performance remains strong, citing third-quarter numbers published by the bank last week. Significantly, Gadhia welcomed news from the Bank of England's Financial Policy Committee on the much-discussed leverage ratio, a ratio of a firm's capital level to a gross measure of its exposures or assets, which proposed requirements lower than had been anticipated by the banks in the countdown to the decision.
Because assets must be funded either by capital or debt, the lower a bank's leverage ratio, the more it relies on debt rather than capital to fund its assets. In weighing all assets equally, the leverage ratio differs from risk-weighted capital ratios, which differentiate capital requirements according to estimates of the relative riskiness of different types of assets.
"We welcome the clarity provided by the Financial Policy Committee on the leverage ratio, and are pleased to note that we operate in excess of the recommended requirements," Gadhia said in a statement.
Virgin Money had a leverage ratio of 3.8% at the end of June.
"Given this and given more stable market conditions, we now plan to move forward with our IPO with the aim of being admitted by the end of November. Access to the public capital markets has been a long-term strategic objective for Virgin Money and we are now ready to take this important step forward for our business," the CEO said.
Within the broader financial sector, River and Mercantile UK Micro Cap Investment company Ltd said it wants to raise up to GBP100 million through an initial placing and offer for subscription of redeemable ordinary shares and a proposed programme of placings. It will list on the Main Market in London.
Structured as a Guernsey-incorporated closed-ended investment company with an indefinite life, River and Mercantile UK Micro Cap Investment company said it will invest in a diversified portfolio of UK micro cap companies, typically comprising companies with a free float market capitalisation of less than GBP100 million at the time of purchase.
Although it hasn't set a target level of return, the company said it is committed to long-term capital growth. Where possible, it intends to make compulsory redemptions of a portion of investors' shareholdings in order to maintain its net asset value, a company's assets less liabilities, at about GBP100 million.
"Whilst acknowledging that this is an unusual approach, were the net asset value to grow, unchecked, significantly beyond that size, this could present capacity constraints, particularly in relation to the number of companies that would then likely be held in the company's portfolio and the ability of those companies to contribute effectively to the company's performance," River and Mercantile UK Micro Cap Investment Company said.
River and Mercantile UK Micro Cap Investment Company's assets will be managed by River and Mercantile Asset Management LLP
Outside of the financial sector, Fevertree Drinks, which supplies premium carbonated mixers for spirits, priced its initial public offering on London's AIM of 69.6 million new and existing shares at 134 pence per share with institutional and other investors.
The placing will raise GBP93.4 million, of which GBP4 million is for the company and about GBP89.3 million for selling shareholders, comprised of funds controlled by LDC (Managers) Ltd, managers and directors, among others.
"We are delighted to have received such strong demand despite the difficult market conditions. The book is very well covered with a significant number of blue chip investors, a recognition of the company's exciting international growth opportunities. We very much look forward to building on our market-leading position as a quoted company," Chief Executive Tim Warrillow said in a statement.
Investec Bank PLC is acting as sole bookrunner, broker and nominated adviser to Fevertree.
By Samuel Agini; [email protected]; @samuelagini
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