IG Group (LON: IGG) on Thursday announced the commencement of a major share buyback program under which it will repurchase ordinary shares of up to £150 million.
The electronic trading platform has entered into non-discretionary instructions with J.P. Morgan Securities for the repurchase of the first tranche of the buyback. Under the agreement, the banking giant will buyback up to £75 million worth of IG shares on behalf of the trading company.
The transactions under the first tranche commenced on Thursday with a deadline to complete on or before 21 January 2023, which is termed as the engagement period. Another tranche to repurchase the remaining £75 million worth of shares will be launched later in the financial year 2023.
IG is aiming to complete the entire buyback program by the end of FY2023. The purpose cited by the company is to reduce the share capital.
“Our new Capital Allocation Framework crystallises our capital priorities to maintain a strong balance sheet, invest purposefully in our business, and meet the needs of key stakeholders. We are thrilled to announce our new shareholder distribution policy including a share buyback programme of up to £150 million,” said June Felix, the CEO of IG Group.
Rampant Buybacks
IG is not the only publicly-listed trading company to launch a buyback program. Plus500 and CMC Markets, two other brokers listed in London, are already repurchasing ordinary shares.
After the commencement of IG’s share buyback program, the stock price of the company witnessed a sudden spike at the start of Thursday's trading hours. However, it corrected immediately and is trading almost 3 percent higher as of press time.
Meanwhile, IG published its financials for the last financial year, reporting a 16 percent jump in its net trading revenue with pre-tax profits at £477 million. Furthermore, the number of active clients on the trading platform climbed 31 percent to 381,500.
