Delta Index in €2m cash call for Europe expansion

DELTA INDEX, the financial spread-betting company backed by former AIB chief executive Tom Mulcahy, is seeking to tap investors for up to €2m in a fundraising that values the four-year-old company at more than €10m.

Mulcahy spent €500,000 earlier this year on a 7% stake in the company when it was valued at €6m.

Delta Index has raised €2.3m since it was set up in 2002, and counts Dolmen Securities among its early investors.

Delta’s founders, finance director Conor O’Neill and operations manager Michael O’Shea, each hold a 22% stake.

The executive chairman, Dermot O’Donoghue, a former head of treasury at AIB, holds 11%.

Risk director Paul Kenny, previously a senior manager at Anglo Irish Bank, and market director, Chris Curran, formerly of Bank of Ireland Private Banking, hold 11% and 7%, respectively.

The company plans to use the proceeds from the cash call to fund expansion into Europe.

It is also gearing up for an increase in interest in spread-betting among the financial community when the Markets in Financial Instruments Directive (MiFID) is transposed into Irish law early next year.

This will bring the industry under the ambit of the Financial Regulator.

Currently, Delta Index falls under the auspices of the customs and excise department of the Revenue Commissioners as it has a bookmakers’ licence. Other operators, such as WorldSpreads and IG Index, apply standards set by the Financial Services Authority in Britain.

Financial spread-betting allows people to speculate on the movement, both upwards and downwards, in shares, stock-market indices, commodities, currencies and interest rates.

The initial outlay on a trade can be as low as 5% or 10% of the value of the transaction.

Delta Index is also looking to extend into contracts for difference (CFDs), another instrument that gives buyers leveraged exposure to the movements of financial assets.

The company’s most recent set of figures show that it made a loss of €475,580 in 2004 on sales of €478,580.

Accumulated losses stood at €946,046.

At the end of 2004, Delta Index had €1m cash in the bank, but current liabilities in the region of €1.5m.

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