IG shares slump to below float price

Shares in IG Group, the financial spread-betting company, slumped below their 2000 flotation price after a profit warning yesterday.

IG, which is chaired by the multi-millionaire Tory donor Stuart Wheeler, blamed "a run of bad luck" but the market sent the stock down 30 per cent amid worries it is suffering from the depressed markets.

The promise of a share buyback failed to halt the shares' slide by 89p to 209.5p.

Nat Le Roux, the new chief executive, said IG had decided in March to reduce the proportion of financial bets that it hedges, leaving itself open to swings in financial markets and individual stocks. "The reason we made the decision is that we have the certainty of reducing our hedging costs," Mr Le Roux said.

But yesterday's trading update was the third in a row to prompt brokers to reduce their forecasts and pre-tax profits are now expected to have fallen in the financial year ending later this week. Profits will be less than £13.7m, compared with £15.7m last time.

Analysts said the City traders and stock market speculators who use spread-betting groups such as IG have had smaller bonuses to gamble with in recent times.

The company came to the market in July 2000 at 240p. Mr Wheeler stepped aside from day-to-day running of the company in March.

Mr Wheeler and Mr Le Roux sold a total of £9.6m of IG shares when lock-ins expired in July 2001, when the stock was trading at 490p.