Spencer kept quiet about using shares as loan guarantee

Michael Spencer, the Tory party fund-raiser and one of the richest men in the City, was today revealed to have taken out loans against his substantial shareholding in stockbroker Numis and not made them public.

The revelation has echoes of David Ross, the former deputy chairman and co-founder of Carphone Warehouse, who was forced to resign from the boards of the mobiles seller, National Express and Big Yellow because he failed to disclose that he had pledged shares in all three companies against loans to fund his private businesses.

Spencer is the second-largest shareholder in Numis Corporation with a 12.2% holding worth about £15.4 million. Today it was revealed that his stake of 13.1 million shares, which are held by his private company IPGL, has been placed as security against a loan from HSBC bank to IPGL.

That loan was only agreed on 6 October but replaced a similar one drawn up in January.
Numis shares have halved in value in that time, falling from 239p on 22 January to 1171/2p today.

Spencer's Numis holding is a small part of his total wealth. The vast majority is his stake in Icap, the quoted interdealer broker he founded, which has grown into one of the top three brokerships in the world. That is currently worth about £372 million while his private interests, which include control of spread-betting firm IG Index, are probably worth another £190 million.
Spencer's net worth, calculated at just over £1 billion around the start of this year, has suffered as Icap shares have more than halved since then.

Spencer is a non-executive director of AIM-listed Numis. The company said Spencer, his wife and family trusts own 55% of IPGL, so dealings by it are required to be made public. However, it added that at the time of the original loans, the private company took legal advice and "believed that the granting of security over Numis shares under normal corporate borrowing facilities did not amount to dealing within the meaning of the AIM rules".

But once the Ross affair blew up, IPGL "sought further advice and concluded that notification should now be made". Numis said the shares remain registered to and are beneficially owned by IPGL and its wholly owned subsidiary INCAP Finance. Similarly, they retain all the voting rights.