After three years of bleak trading for the UK’s small and mid-cap markets, Cavendish, a bellwether for the sector, has struck a cautiously upbeat tone.
The boutique investment bank, which advises scores of AIM- and Main Market-listed companies, said it ended its latest financial year profitably, with signs that investor interest may finally be returning.
Revenues for the year to March 31 held steady at around £55 million, and the firm stayed in the black throughout, supported by a solid performance across both public and private markets. Net cash stood at £21 million, giving it a strong base to build from.
While public market activity remained subdued, Cavendish said it grew market share, advising on the final UK IPO of 2024 and the first of 2025.
It also continues to top the rankings for the number of AIM-listed growth companies it supports. A solid pipeline, including more IPOs, suggests some green shoots of recovery, albeit tentative ones.
But it’s private markets that are really doing the heavy lifting. Advisory revenues grew strongly, boosted by a growing number of entrepreneurs exploring exits and a wave of fresh capital from UK private equity firms.
Cavendish has expanded its regional footprint too, opening offices in Manchester and Birmingham and hiring new teams to deepen its presence.
As things stand, the firm enters its new financial year with more active mandates than it had a year ago.
The outlook, while still fragile, appears to be firming. The UK’s Budget last September didn’t dent business owner sentiment, and Cavendish sees scope for more dealmaking in sectors favoured by private equity - especially with 20 firms having raised £7 billion over the past 18 months.
The public market picture is trickier. But Cavendish’s chair, Lisa Gordon, is now part of the government-backed Capital Markets Industry Taskforce, giving the firm a front-row seat in efforts to revive equity investment in smaller UK companies.
And there may be a shift underway. As investors reassess the risks in overvalued US tech stocks, Cavendish notes early signs of a rotation towards European and UK equities.
If that continues, some of that capital may eventually filter down to the UK’s undervalued small and mid-cap sector, where Cavendish is poised to take full advantage.