Zetters strengthens IFX with £8.7m buy

Zetters, the football pools operator, yesterday bolstered its IFX betting arm with the acquisition of Sporting Index's financial spread-betting business for £8.7m.

Graham Wellesley, Zetters' chief executive, said the deal would increase IFX's exposure in the UK spread-betting market, complementing its predominantly foreign client base. Zetters' shares rose 3 per cent to 136p.

The purchase of Financial Spreads will be partly funded through a £4.7m share placing. The rest will come from Zetters' internal resources, leaving the group with about £15m cash.

Richard Glynn, the chief executive of Sporting Index, said his company would concentrate on sports-related betting. "Such markets present substantial growth opportunities, especially over an 18-month period which includes three different World Cup events," he said.

Analysts said the deal was a precursor to Zetters selling its football pools business, which contributes around 10 per cent to the group's pre-tax profit. Zetters intends to change its name to reflect its core financial services business of making markets in foreign exchange and contracts for difference.

"The pools business is in decline and while we are controlling that decline we don't see it providing short to medium-term growth prospects because of the cost to shareholder value of being associated with the business," Mr Wellesley said.

Zetters is hoping to cash in on the surge of City interest in spread betting, which enables punters to buy shares but avoid paying stamp duty and capital gains tax.

Richard Cecil, an analyst at Granville Baird, said: "Financial Spreads will give IFX critical mass and help them roll out the spread-betting platform into Europe."