Volatile market conditions force CMC to pull float

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The Independent Online

The £800m flotation of CMC Markets was shelved at the 11th hour last night as the online financial trading group became the latest company to pull its float due to stock market turbulence.

The company, which specialises in contracts for difference (CFDs) for retail investors, had been due to price its initial public offering last night. But speculation had been mounting that the past fortnight's market volatility, which has hammered financial stocks, would force CMC to slash the offer price or delay the float.

A number of other companies also postponed their stock market listings on the London Stock Exchange yesterday. Sigma Capital Investments, a Black Sea property group, said it was pulling its float - which was expected to raise up to €140m (£95m) - until the market stabilises.

A technology investment company backed by HBOS also postponed its debut on the London stock market and cut back the amount of money it expects to raise by about 25 per cent. Braveheart Investment Group was due to list on the Alternative Investment Market tomorrow and raise up to £20m, giving it a value of £40m. The float has been delayed until the second half of next week, and is now expected to raise up to £15m.

Global stock markets have suffered steep losses in recent days amid concerns over rising US interest rates and sliding commodity prices.

Analysts had cautioned that CMC was unlikely to achieve the expected £800m valuation. Saurabh Mukherjea from Clear Capital, an equity research firm, said: "I get the sense that increasingly fund managers are pushing for a 17 times [earnings] valuation, something around £560m-£570m. I don't expect that to be acceptable to management."

CMC, which also offers spread betting and trading in gold, oil and foreign exchange, reported an adjusted operating profit of £36.7m for the year to the end of March on turnover of £75.7m. The company, which appointed Deutsche Bank and JP Morgan Cazenove as joint bookbuilders, was looking to raise £80m in the flotation.

Peter Cruddas, CMC's executive chairman, was due to cash in 30 per cent of his holding for about £240m at the original valuation, cementing his reputation as the richest man in the City and one of the best paid British businessmen. Some analysts were concerned, however, that he would retain a large stake in the group, raising corporate governance issues. A spokesman for CMC emphasised that his intention to hold on to 60 per cent of the business showed his commitment to the company's future.

Mr Cruddas founded CMC in 1989 with a £10,000 investment and has built the company into a global player, with operations in the US, China, Australia and Germany. His father was a meat porter at Smithfield and his brother is a London cab driver.

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