Virgin Money, which is planning a London float that will value the challenger bank at between £1.5-2bn, has decided against offering the shares to the public despite some institutions and advisers pushing hard for this.
Retail offers have been a rarity in the London market this year, despite the massive interest generated last year by the privatisation of Royal Mail.
Some of the larger bulge bracket banks dislike retail offerings because of the complexity they bring to the process.
In a couple of instances this year, Pets at Home and Saga, the insurance to holidays group, retail offerings have resulted in small shareholders, who are also customers, facing up to early trading losses.
Barclays, which has worked on a number of successful retail offerings such as Infinis, Merlin and Royal Mail, is understood to have made a strong case for such an offer with Virgin Money. However, the company and its other advisers have decided to proceed without one.
Fund managers who have seen the company, which operates some of the former Northern Rock branches, have been generally impressed by the story, the brand and the management of the group. “They just need to be careful on price,” one institutional fund manager said.
Many in the market are looking at Virgin Money to see whether a new realism is creeping into the pricing of new issues.