Virgin Money Holdings (UK) PLC (LON:VM) and Standard Life Aberdeen PLC’s (LON:SLA) investment arm are forming a joint venture to provide asset management services to the challenger bank’s customers.
In a joint statement, the two firm’s said Aberdeen Standard Investments (ASI) will buy 50% of Virgin Money Unit Trust Managers for an upfront payment of £40mln, with the deal due to complete at the end of 2018.
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Virgin Money currently has 200,000 retail investment customers and £3.7bn in assets under management.
Commenting on the deal, Jayne-Anne Ghadia, Virgin Money’s chief executive said: “ It is expected to generate significant growth in assets under management, drive additional capital-light returns and to be game-changing for our investment business over the longer term."
Virgin Money said it does not expect any material impact on underlying profit in 2018 from the deal, but sees an increase of around 40 basis points in its CET1 (common equity tier 1) solvency ratio,
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In late afternoon trading, FTSE 250-listed Virgin Money saw its shares gain 2.1% to 270p. Standard Life Aberdeen shares on the FTSE 100 index were 0.9% higher at 376.10p.
Last month, Lloyds Banking Group PLC (LON:LLOY) announced plans to axe a £109bn investment mandate with Standard Life Aberdeen.