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IG Group to sell Nadex, Small Exchange for $216m

By Michele Maatouk

Date: Wednesday 01 Dec 2021

IG Group to sell Nadex, Small Exchange for $216m

(Sharecast News) - Online trading platform IG Group has announced the proposed sale of North American Derivatives Exchange (Nadex) and Small Exchange for a combined $216m in cash.
The company, which owns around 39% of Small Exchange, will be selling the businesses to Foris DAX Markets.

IG said on Wednesday that the transaction is expected to complete in the first half of next year. The deal does not materially impact full-year adjusted operating profit expectations or the medium-term revenue growth guidance for high potential markets provided in July.

Chief executive officer June Felix said: "We're really excited by this deal, as it delivers a significant return on the previous investments made in Nadex and Small Exchange and enables additional investment across all our businesses.

"This deal also allows us to further sharpen our focus on integrating and expanding the US options and futures business through our tastytrade and tastyworks franchises, both in the US and internationally, where we see significant room for growth."

Shore Capital analyst Vivek Raja said: "Proceeds (circa £150m) of the disposals will bolster IG's already significant excess capital resources, providing further optionality for shareholder returns or reinvestment in the business, as IG reconsiders its capital management priorities which it is due to shortly communicate.

"With today's disposal announcement, IG has confirmed current year profit expectations and its medium-term revenue growth guidance. The impact to forecasts is not material with Nadex circa 1% of revenue and an even smaller relative profit contributor we think whilst Small Exchanges we believe is currently loss making. As such we are not expecting to change forecasts and reiterate our buy rating on IG, which has de-rated materially since calendar Q1 this year to a 12m forward price-to-earnings of c.11x from nearer 15x over this period with dividend yield of around 6%."

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