CVC closes in on spread betting deal

CVC is backing management in a proposed take-private transaction of IG Index valuing the British spread betting business at £150m.

CVC Capital Partners, the UK private equity house, has emerged as the backer of a proposed management buyout of IG Index, the UK-listed spread betting business.

IG, which floated on the London Stock Exchange in July 2000, became the subject of deal speculation in January, when it was revealed that major shareholder Stuart Wheeler, who founded the business in 1974, was planning to offload his 24 per cent stake in the business.

IG Group Plc is the holding company of two wholly-owned subsidiaries, IG Index Plc and IG Markets Ltd. IG Index offers spread betting on financial and sports markets, whilst Asia-based IG Markets deals in foreign exchange and contracts for difference (CFDs).

In its interim results for the six months to November 2002, IG reported income of £20.2m, up from £18.8m for the same period in 2001. However, it reported a seven per cent drop in pre-tax profits to £7.8m

IG Index confirmed in February that it had received a number of offers for the company, including a proposal from management. UK buyout firm Duke Street Capital was thought to be the frontrunner in the bidding to take the company private, having stated its interest in the sector late last year with the acquisition of Sporting Index, the UK sports spread-betting company, which it acquired for £55m.

However, Reuters reports that CVC has reached agreement with management over the terms of an offer for the business, which is currently capitalised at just under £150m. The company is currently trading at 258.5 pence per share, compared with a price of 221 pence in January.