IG Group extends share buybacks after Freetrade acquisition
IG Group is set to spend £50m more on share buybacks following its acquisition of trading app Freetrade.
In the firm’s six month results to 30 November, the FTSE 250 firm said it would be extending its previous share buyback programme from £150m to £200m.
“It is pleasing to show how we can both invest in accretive growth and return capital at attractive equivalent rates of return on our buyback, all whilst safeguarding our robust balance sheet,” said IG Group chief executive Breon Corcoran.
The results revealed that IG Group’s revenue over the six months had jumped 11 per cent to £522.5m, while adjusted profit before tax rose 30 per cent from £205.7m to £266.8m.
Despite the strong growth from IG Group, the results were received with mixed feelings from analysts.
Jefferies had forecast trading revenue would total £453m, while it actually only grew to £451.7m, though the analysts had predicted an adjusted profit before tax of only £242m.
Meanwhile, RBC forecast a 12 per cent growth in revenue, but a 40 per cent growth in earnings per share, compared to actual growth of 43 per cent.
“First half performance reflected more supportive market conditions, but we have work to do to grow active customers which will be necessary to deliver sustainably stronger growth,” added Corcoran.
Last week, the FTSE 250 firm acquired stock trading app Freetrade for £160m, with the firm set to move to IG Group in mid-2025.
The direct-to-consumer trading platform launched in 2018 and offers commission-free shares, ETFs, and gilt trading. Investors had a mixed reaction to the sale, with some irritated that the sale value had been below that of recent fundraising rounds.
“CEO Breon Corcoran has re-energised the investment case for IG Group setting out the opportunity and identifying areas of improvement,” said RBC analyst Ben Bathurst.
IG Group’s shares have responded positively, jumping 25 per cent in the last six months, but Bathurst noted that they still “remain at a discount to historical averages and to peers”.