CMC Markets still undecided on IPO; set to hold meeting today

At the end of last year, prominent British CFD and spread betting company CMC Markets, led by former Conservative Party Treasurer Peter Cruddas, set in place some further new appointments to the board of directors in preparation for what mainstream commentators are considering to be a very likely initial public offering (IPO).

Whilst the clamor among so many sends out a message that an IPO is a done deal, there is more to consider.

At the time of the appointment of Manjit Wolstenholme and former Deloitte and Ernst&Young partner Malcolm McCaig in December, Mr. Cruddas had stated that this was “another step towards a flotation in 2016” however a step is what it was, and the company is still trading a very careful path.

CMC Markets is currently being advised by specialists at Goldman Sachs and Morgan Stanley, however the firm’s board is set to meet today in order to discuss a timetable for its potential public listing.

At the end of last year, speculation by London’s financial media arose, with many pundits considering that an IPO could value the company at approximately £1 billion, with 90% ownership held by Mr. Cruddas and 10% by Goldman Sachs.

Today’s meeting is indeed a matter of routine, however it is possible that the outcome could result in the company filing an immediate intention to list its stock publicly, however caution from advisers within Goldman Sachs and Morgan Stanley still exists around volatile equity markets which have blighted the stock venues of the world since the beginning of this year, which could delay a final decision.

Mr. Cruddas has suggested that should the listing proceed, 25% of the company’s shares would then venture onto a public venue, however the company may look toward listing a smaller percentage than 25% because of the market conditions.

The company has officially stated that it is still considering an IPO but has not commented to any financial publication regarding any details on this matter.

CMC Markets has a history of responsibility and conservatism, having canceled its intention to float in 2006, having been dissuaded by exactly the same considerations as are relevant today – market conditions, with the only ensuing deal having been Goldman Sachs taking a 10% ownership in the firm for approximately $140 million in 2007.

It could still go either way, a matter worth considering being that this year, IPOs have been less favored by FX firms which have instead looked at consolidation and acquisition of specialist companies instead of rushing to list their stock publicly.