Virgin Money buys out Abrdn in investments joint venture as asset manager takes hefty haircut

Virgin Money has agreed to buy out Abrdn’s 50 per cent stake in their joint venture, Virgin Money Investments, in a £20million deal. 

The fee means the FTSE 250-listed asset manager has lost over half the value of its investment in Virgin Money Investments made just four years ago. 

Aberdeen Standard Investments, as it was previously known, purchased a 50 per cent stake in the firm for £40million plus capital adjustments of £10million, for a total sum of £50million, in 2019. 

On Wednesday, Virgin Money said the fresh deal came after a new digital platform was rolled out last year, followed by a fresh pension offering.

By December, Virgin Money Investments had around £3.7billion in assets under management and over 150,000 customers, according to Virgin Money.

Virgin Money wants to double Virgin Money Investments’ assets under management within the next five years. 

Staff at Virgin Money Investments will move into Virgin Money, with ‘no anticipated job losses’.

Virgin Money director, Allegra Patrizi, said: ‘Taking full control of Virgin Money Investments will mean we can bring the investments and pensions business together with our deposits, mortgages, credit cards and daily banking, enabling us to help more customers feel confident to invest.’

While the bank will take full ownership, Abrdn will continue to provide the investment advice for Virgin Money Investments. 

Under the terms of the deal, which is subject to customary approvals, Virgin Money will acquire the 50 per cent of Virgin Money Unit Trust Managers Limited, currently owned by abrdn, for a cash payment of £20million, funded entirely from Virgin Money’s existing capital resources.

Virgin Money added: ‘The purchase will enable Virgin Money and abrdn to focus on their respective strengths; Virgin Money’s broad appeal and distribution, using brilliant digital propositions and compelling rewards for customers, and abrdn’s strength in asset management.’ 

Virgin Money shares were up 0.86 per cent or 1.35p to 157.95p on Wednesday, having fallen over 14 per cent in the last year. 

Abrdn shares rose 1.98 per cent or 3.15p to 162.05p on Wednesday, having fallen over 24 per cent in the last year.