Jobs at risk in investment banks amid dearth of IPOs
The latest among these banks to cut jobs is Cavendish which was formed in September 2023 through a £43m merger of London brokers Cenkos and FinnCap during a flurry of consolidation among Britain's mid-sized investment banks. It was a part of a broader surge in consolidation in the sector at the time.
In the same year, Deutsche Bank acquired Numis for £410m, while in January 2024 Panmure Gordon and Liberum announced a tie-up that created Panmure Liberum – a new force in investment banking and corporate broking.
Peel Hunt, which cut 10 jobs at the end of the first quarter, with departures earlier including its head of equities Alex Carter as well as senior traders. The firm posted a £3.5m pre-tax loss for full fiscal year to 31 March.
London-focused investment banks have looked to diversify their revenue streams away from UK equities after years of revenue declines to focus on mergers and acquisitions (M&A). However, the on-going dearth of deals has forced more firms to cut back.
Not surprisingly, restructuring has been going on in the sector. Singer Capital Markets – a leading investment bank dedicated to supporting ambitious UK growth companies, was formed in 2006. It named new leaders of its investment banking unit following the departure of its chief executive Steve Pearce in April.
Cavendish's co-chief executive Julian Morse and John Farrugia said some months ago that the firm was looking to grow after cutting £7m of costs following the merger. In an April trading update, Cavendish said it expected its fiscal revenue for 2025 to be £55m, which is in line with a year earlier. The bank has a market capitalisation of £46.5m.
In March, the bank launched a new office in the Midlands, led by M&A banker Darren Boocock.
Cavendish has rejected a take over approach for two of its key dealmaking units that would have triggered a breakup of the City investment bank if it had accepted. London-listed Cavendish confirmed in a stock market statement that it had 'received interest' in its private M&A and debit advisory businesses. However, it did not identify the firm or firms that made the approach.
Sky News earlier reported that private equity-backed professional services firm S&W (formerly part of Evelyn Partners, now fully independent positioning itself as a leader in the accountancy mid-market) had made an offer in recent weeks for Cavendish's M&A arm. Shares is Cavendish jumped as much as 24 per cent to their highest level in almost a year following the report. It did not disclose the financial terms of any approach.
These gains were pared down once the bank said it had rejected an approach. Cavendish's shares were still up more than 7 per cent at 12p at the time of publication. S&W was spun off from Evelyn Partners earlier this year after being acquired by private equity giant Apax. Apax declined to comment on its reported interest in Cavendish. S&W could not be reached for comment.
Like rivals Peel Hunt and Panmure Liberum, Cavendish has felt the squeeze from a downturn in IPO activity and a shrinking pool of London-listed firms in the last few years and it put 10 jobs at risk.
'The group's strategy is to focus on growing and evolving as a full service, fully integrated, small and mid-cap investment bank with the potential for adding additional business offerings rather than reducing them,' Cavendish said in a statement.
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