The founder of the UK viral betting business CMC Markets will earn a £6 million dividend from the business before proposing to split next year.
Peter Cruddas, who owns about 62% of the company with his family, says that separating CMC’s riskier spread betting business from its nascent investment platform, which offers stock brokerage services, is “without question” because it will create value for shareholders.
He described the split as almost inevitable, arguing that “logic is for everyone to see”. CMC already has two more clients for investment and stockbroking services per client in spread betting, he said.
“It’s not that much of a decision when you can see where the explosive growth is,” he said.
The company recently purchased an investment business in Australia and plans to launch its retail investment platform in the UK in the next six months.
Cruddas said the split would mean attracting shareholders, adding that the share price was only 10 to 15p above its IPO valuation five years ago despite the growth, a partly because “people just see us as a spread betting business”.
He also noted that investment platform Interactive Investor is in talks to be acquired by Abrdn for around £1.5 billion while CMC is valued at £748 million.
“There’s a lot of value locked in this company that we’re going to release.”
He said a decision on branding any individual retail investment business had not been made but acknowledged it could be beneficial to have a separate name as CMC is “synonymous” for arbitrage betting. deviated. The new business will also be listed in London, he said.
Releasing its first half results on Wednesday, CMC confirmed a sharp year-over-year decline in business activity, which led to a profit warning in September. Shares in the group fell 8% on Wednesday morning to 250p.
Net operating income fell 45% to £127m year-on-year, while pre-tax profit fell by almost three-quarters to £36m. The company reiterated its full-year net operating income guidance of £250-280 million and announced a dividend of around £10 million.
Cruddas said the company is confident about the rest of the year, anticipating a more “normalized” trading market following a particular period during the pandemic when investors bet on the markets. fluctuations.
Cruddas is a major donor to the Conservatives, and was named his counterpart last year by Boris Johnson. Asked if he was worried about recent allegations of anti-government conduct by Johnson, he said: “Not at all. . . If they need it, I’ll send them the money tomorrow. “
