IG Group agrees to £143m management buyout

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The Independent Online

IG Group, the pioneering spread betting firm set up by Stuart Wheeler in 1974, is to be sold in a £143m management buyout backed by CVC, it was agreed yesterday.

The long-awaited deal will see Nat le Roux, the current chief executive, and 14 other executives reinvest most of the proceeds from the sale in the new vehicle.

Mr le Roux is paying £2.1m for a 10 per cent stake of the new company, to be called IGGHL. In total, management will own about 25 per cent of the new equity. Mr Wheeler, who is still chairman of IG, will net £33m from the sale of his 23 per cent stake.

The flamboyant businessman, who made Britain's single biggest political donation by giving £5m to William Hague's Conservative Party in 2001, sparked the buyout preparations in January when he said that he and IG's other founders wanted to sell the remainder of their shares.

Mr Wheeler said yesterday that the deal means he can pay the spiralling repair bills at his 17th century Kent mansion, Chilham Castle. "It will be a great relief. Work starts next Monday and we would have had to borrow a bit otherwise, which is not a good thing at my age... What with one thing and another it is going to cost more money than it did to buy it."

More than 70 per cent of IG's shareholders have already accepted the offer from IGGHL, which is pitched at 255p. That is modestly ahead of the 240p at which the shares were floated in July 2000, but less than half their peak in 2001.

The company said that it made pre-tax profits of £15.3m in the year to 31 May, up 14 per cent. Costs were higher than expected after IT work went over-budget, and the company has trimmed staff numbers.

Profits were also hit by start-up losses at IG's Australian business, with Mr Wheeler saying: "There was initially some political opposition to our establishing our activities in Australia but this has to a large extent been overcome. The main difficulty we now face is that the tax status of any profits made by our clients is still uncertain."

CVC has promised to back further international expansion. The venture capitalist group also said it would make funds available for acquisitions if there were opportunities to consolidate the United Kingdom's fragmented spread betting sector.