The American billionaire, who made his fortune investing in struggling steel and oil companies, will take a 21% stake in Virgin Money through his WL Ross investment vehicle as part of the deal.
Virgin said the investment would provide fresh capital to allow it to speed up the expansion of its full service retail bank and help it create a branch network.
The firm is thought to be making a play for the UK high street with a bid for 318 Royal Bank of Scotland branches being sold off under competition rules.
Virgin is expected to face stiff competition for the RBS branches as other potential buyers circle ahead of an initial bid deadline on Tuesday.
If Virgin fails to win the RBS network, the group has its own plans to enter the high street, with aims to open 70 branches by 2015 and a loan book of £10 billion financed by Tuesday's £100 million of new capital.
Virgin Money said the deal also allows Mr Ross the flexibility to pump more money in to fuel further expansion if the opportunity arose.
Mr Ross added that a further injection of cash was possible and said he was "impressed" by Virgin Money's growth strategy and customer service reputation.
"We look forward to supplying substantial additional capital to support Virgin's acquisition programme," he said.
The US billionaire is reportedly willing to invest up to 10 times his initial investment if needed.
( Source: Press Association)
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