IG Group Holdings plc (LON: IGG), a leading online trading provider, has completed a significant capital reduction, unlocking more than £425 million in reserves. This move, finalized after approval from both shareholders and the UK High Court, is designed to give the company greater flexibility in returning value to its shareholders and supporting future growth initiatives.
Details of the Capital Reduction
IG Group released £300 million by creating and then promptly cancelling a new class of “New Deferred Shares.” An additional £125.7 million was transferred from the share premium account, and the capital redemption reserve was also reduced by £3,501.
The capital reduction was aimed at converting restricted reserves into “distributable profits,” which can now be used for dividends, share buybacks, or other shareholder-focused actions. The process required both a special resolution from shareholders and final approval from the UK High Court, ensuring compliance with UK corporate regulations.
Strategic Impact on Shareholder Returns
By increasing its distributable reserves, IG Group now has more scope to pay larger or more frequent dividends and to continue or expand its share buyback programs without needing to raise new capital. The company’s board previously stated that the unlocked capital would provide flexibility to make future distributions of profits in cash or in specie and/or to make purchases of its own shares.
IG Group is currently running a £200 million share buyback program, which began in July 2024 and was extended in January 2025. The company has already completed two other major buyback tranches valued at £150 million and £250 million, respectively. The latest tranche is set to conclude by June 2025 and is intended solely to reduce share capital, thereby enhancing shareholder value.
Potential for Strategic Acquisitions
Earlier in 2025, IG Group acquired Freetrade, a retail trading platform, for £160 million in cash. This strategic purchase is expected to strengthen IG’s position in the UK market and expand its customer base. Freetrade’s scalable technology and broad product offering will allow IG to access new market segments and explore further product and market expansion opportunities.
Financial Performance and Market Outlook
IG Group reported robust financial results for the first half of fiscal year 2025, with total revenue reaching £522.5 million, an 11% increase year-on-year. Adjusted profit before tax rose by 30% to £266.8 million, reflecting improved market conditions and operational efficiency. The company’s ongoing fiscal year is expected to close with revenue and adjusted profit at or above the upper end of market expectations, driven by increased client trading activity, particularly during periods of heightened market volatility.
Quarterly revenue highlights include:
- Q1 FY25 (June–August 2024): £278.9 million in revenue, up 15% year-on-year.
- Q2 FY25: £243.6 million.
- Q3 FY25: £268.0 million.
Looking Ahead: Growth and Shareholder Value
With the capital reduction complete, IG Group is well-positioned to continue rewarding shareholders through dividends and buybacks, while retaining the flexibility to pursue further acquisitions or strategic investments. The company’s forward-looking statements indicate a commitment to sustaining growth and delivering value amid evolving market conditions.
IG Group’s capital reduction marks a pivotal step in its ongoing strategy to maximize shareholder returns, enhance financial flexibility, and pursue new opportunities in the competitive online trading landscape.