Spread bet firm to sell its Irish operation for €11.3m

DUBLIN-LISTED financial spread betting firm WorldSpreads is expected to confirm the sale of its Irish division to management over the coming days.

Management of the Irish operation, led by co-founder and group chief operating officer Brian O’Neill, is believed to be paying about €11.3 million to acquire the business in a transaction backed by Dublin finance house Merrion Capital.

The deal will be subject to approval from the listed group’s shareholders and also from the Financial Regulator.

WorldSpreads informed the stock market at the beginning of July that it had received an approach from management for the Irish business, but said there was no certainly that this would lead to any offer being made.

The company, which was founded in Dublin in 2000 by chief executive Conor Foley and Mr O’Neill, is listed on both the Irish and London stock exchanges.

The Dublin operation at the centre of the deal focuses almost exclusively on the Irish market and, since October last year, is regulated by the Financial Regulator. It employs around 20 people.

The London division, which has been regulated by Britain’s Financial Services Authority since 2004, runs the business in both the UK and internationally, and accounts for the bulk of WorldSpreads’ revenue.

Outside of Britain and Ireland, WorldSpreads has operations in 12 other countries across Europe, including Russia, as well as in Malaysia and South Africa. About 40 employees are based in London.

It is understood that the existence of two separate regulatory regimes for the company’s business was one of the driving forces behind the move to sell the Dublin operation. Mr Foley will continue to run the London company.

The deal is expected to involve an upfront payment of around €8 million, with further cash payments on the first and second anniversaries of the transaction.

However, it is understood that any such payments are not likely to be dependent on the business’s performance following the handover.

Financial spread betting allows investors to trade financial markets without paying the commission and capital gains tax involved in actual share transactions because the trade is presented in the form of a bet.

The group saw operating profits from continuing operations jump 40 per cent to €4.6 million last year – its second year as a listed company – from €3.2 million in the 12 months to the end of March 2008 after stripping out the costs of the IPO.

Revenues rose 39 per cent to €14.9 million over the same period.

WorldSpreads floated on London’s junior AIM market in August 2007.

The company took a Dublin listing in April 2008 on the IEX market.

The company sold its non-core sports betting division earlier this year for a fee of up to €1.5 million to the management of that division, which was led by Fergus Rice.

It is understood that WorldSpreads is being advised by Collins Stewart and Flynn O’Driscoll, while Dillon Eustace is acting for the management team.