Lord Cruddas eyes £40m Winterflood raid amid motor finance crisis

Lord Cruddas, the former Conservative Party treasurer, is planning a £40m takeover of Winterflood, one of the City’s most well-known broking franchises, as its parent company grapples with the crisis affecting the motor finance sector. Sky News has learned that CMC Markets, the online financial trading and investment group founded and led by Lord Cruddas, is one of several parties that have engaged in recent discussions with Close Brothers Group regarding a potential acquisition of Winterflood. Close Brothers, which has earmarked £165m for compensating customers who were mis-sold car loans, is reportedly collaborating with UBS bankers on a potential sale of the brokerage firm. Established in 1988 by Brian Winterflood alongside a team of nearly 40 brokers from County NatWest, the business was purchased by Close Brothers in 1993. Mr. Winterflood, who passed away in 2023 at the age of 86, was known as the «founding father» of London’s junior AIM stock market, having founded its predecessor, the Unlisted Securities Market. Despite its prominence, Winterflood has faced challenges recently in a difficult trading environment. Close Brothers reported in its annual results last month that market conditions have continued to be unfavorable at Winterflood, with the unit posting a £0.8m loss for the six months ending on January 31. Winterflood’s trading income declined by 6% to £24m, partly due to subdued investor confidence in AIM-listed stocks. The broader Close Brothers also recorded a loss during the same period as a result of the motor finance provision, with the company being particularly exposed to the crisis affecting British banks, which has reached the Supreme Court. An acquisition of Winterflood by CMC would be a strategic add-on for Lord Cruddas, who has expanded CMC Markets into a broader investment empire in recent years. CMC has a market valuation slightly above £650m, with Lord Cruddas holding a majority stake in the company. It recently formed a partnership with Revolut, one of the world’s most valuable digital banks, to provide customers with trading services using its CMC Markets Connect technology. While the Tory peer previously explored breaking up CMC, it is no longer an active consideration. The extent of the discussions between CMC and Close Brothers was unclear on Friday. Individuals close to Close Brothers indicated that the sale of Winterflood was not certain and would only proceed if an attractive valuation could be secured. Close Brothers has already divested its wealth management subsidiary through a £167m transaction with funds managed by Oaktree Capital Management. Lord Cruddas is not the sole potential acquirer of Winterflood, as Peel Hunt, the London-listed mid-cap investment bank, is also reportedly interested in a deal. Peel Hunt has not engaged in serious discussions about a bid, and the financing of any potential deal remains uncertain as of Friday. Close Brothers’ shares closed at 295.4p on Thursday, resulting in a market capitalization of £445m. The stock has declined by a third over the past year. CMC Markets and Close Brothers declined to provide comments.

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