Plus500 distances itself from Odey Asset Management
Plus500 Ltd (LON:PLUS) today said it bought back 7.3 million shares, which represents 8.2% of its issued share capital, from the beleaguered hedge fund Odey Asset Management.
The London-listed brokerage house paid a total of £101.3 million ($126.8 million), at a price of 1,383 pence per share. This purchase price represents a slight discount compared to Monday’s closing price of 1,390 pence.
The news of the buyback contributed to the positive market response and fueled the surge in Plus500’s stock.
“Given the significant strength of the company’s balance sheet and the prevailing circumstances, the board believes the purchase is in the best interest of all shareholders. The company has acted quickly to execute this opportunity to acquire shares at an attractive price, in-line with the company’s capital allocation and shareholder return policy,” Plus500 said.
Odey Asset Management has been rocked in recent days following allegations of “years of sexual assault” against its founder, Crispin Odey. The accusations were made by multiple women and were brought to light in an investigation conducted by the Financial Times. As a result, several investment banks have been distancing themselves from the London-based hedge fund.
Odey has invested in Plus500 since disclosing a stake in the company in August 2015. Since then, it has raised its holdings many times, particularly in 2019 when the CFD provider’s shares lost nearly one-third of its value amid material operational and financial impact from ESMA’s regulations.
The recent share purchase by Plus500 from its long-term backer is distinct from the company’s existing $70 million buyback program initiated in February, as clarified by the FTSE 250 group. The move was part of its previously announced plan that will put $100 million back into shareholders’ pockets after the online trading platform revealed bumper profits for 2022. That includes paying a $30 million dividend to shareholders.
The extra payouts take the year’s buyback programs to $180.2 million and bring total returns to shareholders in 2022 to $270.2million.
Maintaining a balanced approach between funding growth in key channels and returning excess liquidity to shareholders, Plus500 said that it has updated its shareholder returns policy, keeping the current return of at least 50% of the net profit but only via share buybacks. This compares with the previous policy of returning the profit through dividends and share buyback programs, with at least 50% made by way of dividends.