Former Tory treasurer and Icap founder Michael Spencer has sold his online spread betting business to US rival Gain Capital for $118m (£74m), in a deal that will create a company with 235,000 customers in more than 180 countries, with annual trading volumes of more than $3tn.
Spencer sold the business, owned by his private investment vehicle IPGL, to Gain in a deal comprising of $20m in cash, $60m in convertible bonds and shares in City Index worth $5.3m. The business has $36m of cash on its books, and $65m of net operating losses, which can be carried forward.
Established in 1983, City Index was one of the UK's first spread betting providers, although it suffered during the recession, writing off £35m and forcing Spencer to inject £70m. However, last year the company reported adjusted earnings of $10.7m on revenues of $124.8m.
Today Spencer said he was "very pleased" with the transaction.
[Gain] will be able to move City Index to the next level, by leveraging its broad array of trading products and services onto a global platform. We believe this combination will enhance Gain's leadership position in the FX/CFD industry by putting together two highly complementary companies to create significant value for customers and stakeholders. This is the latest example of the way that IPGL is able to invest actively in businesses over the long term to support their growth and development