UBS was the successful bidder in a small auction of stock in spread-betting firm IG Group Holdings from private equity firm CVC Capital Partners. The placement was the first sale since the stock came out of lock-up in October following the April 2005 IPO. The stock represented 11.5% of the company and three banks were asked to bid after the close on Monday January 23.
Earlier that day, IG Group had released results showing strong growth, particularly in pre-tax profits, which jumped from £6.6m for the six months to November 2004 to £20.4m for the same period in 2005. This led to some moderate upward revisions by analysts, although the stock closed at 189p, a 1p fall from the previous Friday.
Although three banks were asked to bid, only two are understood to have made submissions. The third declined, considering the company to be more of a gambling stock, but many investors – and UBS – see the company as a broker and so look at it against Bridgewell and Numis.
UBS launched the placement of 37.7m shares at a fixed price of 184p, a 2.6% discount to the close, to raise £69.4m. A slight hindrance was that some investors did not want to come into the deal before having post-results meetings with management.
The deal closed around 1.5x covered before the open on Tuesday, with most of the deal taken by UK and US accounts. The sale takes the free-float from around 75% to close to 90%.
The second sale by CVC was a block of Halfords shares through Merrill Lynch. The sale of 17.1m shares amounted to about half its shareholding and was the first sale in the stock to be led by just one bank.
The placing was completed on Thursday morning in less than an hour, so allocations were out before the market opened. Merrill launched the deal with a fixed price of 336p and wrapped up the bookbuild once comfortably covered, to ensure the deal completed before there was a live price.
The deal raised £57.5m for 7% of the company and leaves CVC with a similar holding. Merrill Lynch and Citigroup were joint books on the company’s IPO and on the previous sale by CVC.