Ex-Treasury mandarin to take role in floated IG - Tuesday 12th of April 2005
Sir Alan Budd, the former Treasury mandarin who was chairman of the Gambling Review Body, is to become a non-executive director at IG Group, the spread betting firm that will float at the end of this month for up to ??435 million.
IG, which was taken private for ??143 million by CVC, the venture capital firm, two years ago, will be the biggest stock market float since the listing of Admiral Insurance in September last year.
Sir Alan was Chief Economic Adviser to the Treasury for six years from 1991 and was a member of the Bank of England???s rate-setting Monetary Policy Committee for two years from 1997.
His experience and government contacts would prove invaluable were the light taxation of spread betting to come under Treasury scrutiny. At present, clients of spread betting firms are able to bet large sums of money without paying tax.
Sir Alan, an academic economist and establishment figure, contrasts with the racy image of IG, the biggest of the City???s spread-betting companies. He is Provost of The Queen???s College, Oxford.
Martin Jackson, the former group finance director of Friends Provident and a non-executive director of Admiral, will join Sir Alan as an independent director on the IG board.
The company plans to raise ??124 million by listing to pay off its debt.
CVC Capital Partners is planning to reduce its 60 per cent holding while retaining a significant stake in IG. Rob Lucas, a partner at CVC, is to remain on the IG board. IG employees will own more than 26 per cent, or up to ??115 million, of the shares.
IG said that it would adopt a ???progressive??? dividend policy, with total shareholder payouts targeted at about half the company???s post-tax earnings.
Nat le Roux, chief executive of IG, said that the listing would raise the firm???s profile and increase its financial flexibility. ???We believe the initial public offering will enable us to build upon (our) success and position the group for further growth,??? he said.
IG will sell each share at between 112p and 139p, valuing the firm at between ??375 million and ??435 million. Trading is due to start on the London Stock Exchange???s main market on April 28.
Analysts said that the float would increase the firm???s ability to make acquisitions. IG aims to expand internationally, broaden its client base, deliver new products and technology, and cement its UK position.
The use of spread betting has surged in recent years. Investors use it as a tax-efficient alternative to traditional stock market activity. Competition from rivals ??? notably City Index, CMC Group, Finspreads and Cantor Index ??? has intensified in the past year as trading platforms have improved and the spreads offered by the firms have tightened.
IG was founded in 1974 and floated in London in 2000. Its earnings before exceptional items in the six months to the end of November were ??16.1 million, up 40 per cent, on turnover of ??29.5 million.
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