CMC Markets could split itself into two under plans being considered by founder and chief executive Peter Cruddas, the Tory peer.
Lord Cruddas is in “very early stage” talks on breaking the trading house into a spread-betting arm and a non-leveraged business that would contain the stockbroking arm and other new investment platforms.
CMC said in a statement today that the stock broking arm is growing quickly.
It said: “The Board intends to undertake an exploratory review to consider the viability of a managed separation of the Group’s non-leveraged and leveraged businesses in the interests of maximising shareholder value. As these discussions are exploratory at this stage, they may or may not lead to a managed separation of these businesses in due course.”
Like rivals, CMC saw business boom during lockdown as new punters took to playing markets. That boom has since calmed, perhaps prompting CMC to seek new ways to release value for investors.
CMC hopes it can move in on turf controlled by Hargreaves Lansdown, AJ Bell and others.
Broker Peel Hunt told clients “the next phase of the group’s development will be the launch of the UK investment platform….but there will be a number of challenges/questions for example where would the technology sit given this underpins both businesses?”
Lord Cruddas is a former Tory party treasurer who has made large donations to the party. He was made a peer in 2020, against some objections.
He owns more than 60% of CMC. The value of his stake jumped on the news today – the stock rose 10%, 26p, to 285p.
A profit warning in September hit the shares hard.