LONDON (ShareCast) - (Sharecast News) - Online financial trading group CMC Markets said it was looking at a possible separation of its leveraged and non-leveraged divisions in order to unlock shareholder value.
The London-listed firm on Monday said talks were exploratory at this stage and it would start a formal review before the end of the year and complete it by next June. It was responding to media reports about a potential split.

It is looking at a split of its contracts-for-difference (CFD) operation, called the "leveraged" business, from its growing investment platform and business-to-business operations.

CMC said the CFD and non-leveraged units had benefited from significant investment and the review was triggered by the growing size of its client portfolio as well as by the launch of a new UK investment platform.

In a September profit warning CMC cut its full-year 2022 net operating income guidance was cut to £250m - £280m from £330m. The shares have fallen 38% since then.

Analysts at Jefferies upgraded CMC shares to a 'buy' from 'hold' saying the move announced on Monday "is likely to have been accelerated by dissatisfaction with the valuation".

"The rationale is likely to be to maximise value from the faster growing stockbroking unit - around 19% of first-half net operating income - and investment platform roll-out, details of which are still to be confirmed. These businesses have lower market and regulatory risk than CFD trading, and are less capital intensive."

CMC is run by Peter Cruddas, who also holds 60% of the company. He is a former Conservative Party treasurer who has given millions to the party and was awarded a peerage in 2020, allowing him to sit in the House of Lords and vote on legislation, against the advice of an appointments panel.

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