Lord Cruddas, the former Conservative Party treasurer, is plotting a £40m raid on Winterflood, one of the City’s best-known broking franchises, as its parent reels from the crisis engulfing the motor finance sector.
Sky News has learnt that CMC Markets, the online financial trading and investment group founded and run by Lord Cruddas, is among a number of parties which have held recent talks with Close Brothers Group about a possible acquisition of Winterflood.
Close Brothers, which has set aside £165m for compensating customers who were mis-sold car loans, is said to be working with bankers at UBS on a potential sale of the broker.
Founded in 1988 by Brian Winterflood with a team of nearly 40 brokers from County NatWest, the business was acquired by Close Brothers in 1993.
Mr Winterflood, who died in 2023 aged 86, was dubbed the “founding father” of London’s junior AIM stock market, having established its forerunner, the Unlisted Securities Market.
Despite its prominence, Winterflood has struggled recently amid a tough trading environment.
Last month, Close Brothers reported in its annual results that “market conditions have remained unfavourable” at Winterflood, posting a £0.8m loss for the unit in the six months to 31 January.
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Winterflood’s trading income fell by 6% to £24m, which it said was partly the result of “subdued investor confidence” in AIM-listed stocks.
“With inflation and interest rates moderating, we anticipate a gradual improvement in investor confidence and trading activity,” it added.
The wider Close Brothers swung to a loss during the same period as a result of the motor finance provision, with the company disproportionately exposed to the crisis – which has gone all the way to the Supreme Court – among British banks.
An acquisition of Winterflood by CMC would be a logical bolt-on deal for Lord Cruddas, who has diversified CMC Markets into a broader investment empire in recent years.
CMC has a market valuation of just over £650m, with Lord Cruddas holding a majority stake in the company.
It recently signed a partnership with Revolut, one of the world’s most valuable digital banks, to offer customers trading services using its CMC Markets Connect technology.
At one point, the Tory peer explored a break-up of CMC, but is no longer actively doing so.
It was unclear on Friday how advanced the talks were between CMC and Close Brothers.
People close to Close Brothers said it was not certain that it would offload Winterflood, and would only do so if it could secure an attractive valuation.
Close Brothers has already sold its wealth management subsidiary, striking a £167m deal with funds managed by Oaktree Capital Management.
Lord Cruddas is not the only possible suitor for Winterflood, with Peel Hunt, the London-listed mid-cap investment bank, also said to be interested in the idea of a deal.
Peel Hunt is not thought to have held serious talks about a bid, and it was unclear on Friday how it would finance any deal if it progressed.
On Thursday, shares in Close Brothers closed at 295.4p, giving it a market capitalisation of £445m.
The stock has slumped by a third over the last year.
CMC Markets and Close Brothers declined to comment.
