CMC Markets confirms intention to publicly list on LSE main market in February 2016 – Will initially raise £17 million

The outcome of the meeting held yesterday by CMC Markets with regard to the company’s plans to publicly list its stock on the London Stock Exchange has now been officially announced, with the company intending to proceed with an initial public offering (IPO).

CMC Markets has reported today that it intends to apply for admission of its ordinary shares to the premium listing segment of the Official List of the FCA (the “Official List”) and to trading on the main market of the London Stock Exchange plc (“London Stock Exchange”) (together, “Admission”).

It is expected that Admission will occur in early February 2016.

As part of the announcement today of the company’s formal intention to list its stock, CMC Markets has provided official financial information and operating metrics as publicly available information.

In the six months to 30 September 2015, the Group had 44,017 Active Clients who had traded in the previous 6 months, and the Group processed approximately 45 million and 34 million trades in the financial year ended 31 March 2015 and in the six months ended 30 September 2015, respectively.

During the financial year ended 31 March 2015, approximately 41% of the total nominal value of the Group’s client trades were placed on mobile devices (compared with 36% in the prior financial year), with the remainder of trades predominantly executed through the Group’s traditional online platform and a very small number over the phone. For the six months ending 30 September 2015, this increased further to 48 per cent.

Recent financial performance

Between 31 March 2013 and 31 March 2015, Net Operating Income grew from £107.0 million to £143.6 million at a compound annual growth rate (“CAGR”) of 16 per cent.  In the same period, Underlying EBITDA grew from £12.8 million to £59.7 million at a CAGR of 117%.

The Group’s Underlying EBITDA margin increased steadily over this time period, improving from 12%. in the financial year ended 31 March 2013 to 36 per cent. and 42 per cent. in the financial years ended 31 March 2014 and 2015, respectively.

Most recently, for the six months ending 30 September 2015, the Group reported Net Operating Income and EBITDA of £78.9 million and £30.1 million, respectively, 34%. and 72% ahead of the same period last financial year.

The share offer

As mentioned above, CMC Markets is to list on the premium segment of the London Stock Exchange.

The Offer will comprise an offer of Shares to certain institutional investors in the UK and other qualifying jurisdictions outside the United States in reliance on Regulation S under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and (ii) to certain qualified institutional buyers (as defined in Rule 144A under the U.S. Securities Act) in the United States in reliance on Rule 144A or another exemption from or a transaction not subject to the registration requirements of the U.S. Securities Act that are also qualified purchasers (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940).

Additionally, it will include a Client Share Offer to Eligible Clients of the Group; and an Intermediaries Offer, under which Shares are being offered to intermediaries in the United Kingdom, who will facilitate the participation of their retail investor clients resident in the United Kingdom.

As part of the Offer, CMC is expected to raise gross primary proceeds of approximately £17 million to meet Admission and staff incentive plan costs.

The Offer provides the founding shareholders Peter and Fiona Cruddas, and Goldman Sachs Strategic Investments (U.K.) Limited (“GSSI”) with the opportunity for a partial realisation of their investment in CMC, and provides certain other individual shareholders the opportunity for a realisation of their investment in CMC.

Peter and Fiona Cruddas will together remain majority shareholders of CMC upon Admission and have agreed to a 730 calendar day lock‐up period in respect of 50 per cent. of their interest in Shares held as at Admission, and a 1,095 calendar day lock‐up period in respect of the remaining 50 per cent.

Each of GSSI and CMC has agreed to a 180 calendar day lock‐up arrangement following Admission and the Directors will enter into a 364 calendar day lock‐up arrangement following Admission.

Making a commercial statement on today’s announcement, Peter Cruddas, founder and Chief Executive of CMC said:

“Having grown the business from its beginnings in 1989, I am in the privileged position of having seen the market go through many changes. In recent years CMC has benefited from the transformative effect of online and mobile trading on the wider financial Spread betting and CFD markets, and the ability of clients to trade at anytime and anywhere.”

“CMC has been a leading technological innovator in the sector for the last 26 years with a track record of designing and developing technology in‐house, the most recent example being our award‐winning trading platform, Next Generation, which allows us to deliver a first‐class client experience and positions CMC well to capitalise on the trends we are seeing in the fast growing UK financial Spread betting market and the increasingly global CFD market. “

“Bringing CMC to the public markets will enable us to continue to grow our global brand, build our client base, attract and retain employees and enhance our ability to enable retail traders around the world to trade. Our clients are at the heart of everything we do at CMC and I am delighted that they will have the opportunity to become shareholders in the Group as we embark upon the next stage of our journey.”

Making a further statement on today’s announcement, Simon Waugh, Non‐Executive Chairman of CMC said:

“CMC is a global leader in a rapidly growing market, and embodies the highest standards of client service, technological excellence and robust risk management. Supported by a strong Board with a majority of independent non‐executive directors, we have a management team ready to build on our excellent foundations and offer investors a balance of growth and shareholder returns. I am confident that CMC has an extremely positive future and we look forward to delivering value for all our shareholders as a publicly‐listed company.”