The high street bank and Aberdeen Standard Investment confirmed on Wednesday they had signed a conditional agreement for the sale of 50% of Virgin Money Unit Trust Managers and agreed the key terms of the strategic joint venture offering investments and pensions propositions. It involves an upfront payment of £40m.
When the joint venture was first announced in March 2018, Virgin hinted that fees on its UK Index Tracker would come down describing the deal as “a significant opportunity to transform our retail investment offering”.
However, this week Portfolio Adviser analysed costly tracker funds raking in fees revenue ahead of FCA value for money changes in September and found the Virgin UK Index Tracker still had a 1% OCF on its £2.7bn assets under management. The tracker represents a substantial chunk of the total £3.7bn AUM involved in the deal.
Virgin Money blamed the lack of movement on fees on the fact the deal had not yet completed but would not provide a timeline on when that was due to take place. However, Wednesday’s announcement revealed the deal is scheduled to complete in Q2 2019.
Distribution expands under CBYB takeover
In the period since the joint venture was announced, Clydesdale Bank and Yorkshire Bank (CBYB) acquired Virgin Money expanding the customer base involved in the initial deal from 3 million to 9 million.
Aberdeen Standard Investments chief executive Martin Gilbert (pictured) said: “The partnership offers a fantastic opportunity to develop a business that combines the best talents of Virgin Money and ASI. Most importantly, the joint venture will offer customers across the enlarged CYBG group, beyond Virgin Money’s existing customer base with investment solutions to help them achieve their long-term financial goals.”
CBYB chief executive David Duffy said: “Using our brand and customer reach, combined with ASI’s clear asset management strengths we will be able to provide a truly compelling investment and pensions proposition to our retail customers.”