CMC Markets stock soars amid talks over split

Rick Steves

The new UK investment platform will be launched next year and will feature investment products, shares, tax wrappers, and third party funds in its offering.

CMC Markets has confirmed the Sky News report that the financial technology company is considering splitting the investment group in two.

“The Board intends to undertake an exploratory review to consider the viability of a managed separation of the Group’s non-leveraged and leveraged businesses in the interests of maximising shareholder value”, the firm said in a statement today.

“As these discussions are exploratory at this stage, they may or may not lead to a managed separation of these businesses in due course”.

CMC Markets is prepping up its new investment business as a potential rival to AJ Bell, Hargreaves Lansdown, and Interactive Investor.

The new UK investment platform will be launched next year with plans to feature investment products, shares, tax wrappers, and third party funds in its offering.

The stock market welcomed the news which triggered an upward move in early Monday, with shares rising by 8%. The market closed up by +6.37%.

The discussions over a split of the bussiness are still at a very early stage, according to the firm. The review by the board will start before the end of the year and be completed by June.

Peter Cruddas, the founder of CMC Markets, owns a 62.5 percent stake in the business with his family.

In September, CMC Markets acquired the Share Investing client base of ANZ for AUD$25 million in a deal that includes over half a million clients.

CMC Markets’ existing cash resources will fund the AUD$25 million consideration as the deal marks another significant step in the ongoing diversification of the company’s global business and in the Australian market.

The broker is thus addressing the high demand for retail stockbroking services in a very strong period for the asset class worldwide.

At the time, Peter Cruddas said the transaction is part of the firm’s strategy “to create a non-leveraged investment platform and forms part of our longer-term goals for the company”.

“As this new venture expands and develops, we will be able to offer more products, including third party funds and tax wrappers, directly to our clients. This is a further step towards the diversification of CMC’s earnings and complements the launch of our new investment platform in the UK, aligning our business strategy across our core geographies”, he added.

The new 500,000 clients onboarded by CMC will be offered a wide range of additional benefits currently unavailable with ANZ, including its mobile apps and complementary education tools and resources, as well as lower brokerage charges across four major international markets and the local Australian market.

 

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