Two of the mainstays of the small-cap end of the stock market are to merge in an all-share £42mln transaction.
Corporate brokers finnCap Group PLC and Cenkos Securities PLC (AIM:CNKS) will have a combined 210 clients and 230 staff once the deal goes through and will be run by joint CEOs John Farrugia and Julian Morse.
The recommended offer follows an abortive takeover play for finnCap by Bob Diamond’s Panmure Gordon.
It likely also reflects the tough market for companies such as finnCap and Cenkos tasked with raising funds for growth companies. Certainly, there has been a dearth of IPOs at this end of the market in the wake of the Ukraine War, the cost of living crisis and the consequent increase in base rates.
Reflecting this lack of activity Cenkos’ share price has tumbled 50% in the last year, and is down around two-thirds from its 2018 high. finnCap’s stock, meanwhile, has tumbled 59% in the last 12 months and is off 75% from its 2021 high.
finnCap chair Lisa Gordon, who will take the same role at the combined company, characterised the transaction as a “proactive and mutually-beneficial merger creates a champion for growth and investment companies”.
“The two firms' cultures are very similar, and our client lists and capabilities are complementary. This is good for our clients, our employees, our investors and the UK capital markets as a whole," she added.