Mid-cap city brokerage finnCap Group plc is in takeover talks with fellow broker Panmure Gordon, according to inside information recently made public.
While discussions are at an early stage, finnCap has confirmed speculation that the firm has “received indicative non-binding proposals from Panmure Gordon Group regarding a possible combination of the two companies structured as the acquisition for cash”.
As per City code regulations, Panmure Gordon is now required to make a formal intention of offer on finnCap.
The news comes as small and mid-cap city brokers face a crisis amid a dried up London IPO market, leaving the likes of WH Ireland, Numis and Cenkos as other potential takeover targets.
There’s a good chance that some if not all are open to a buyout, but a takeover by Panmure Gordon could prove controversial for finnCap.
Diamond and Rich: Brokers in arms
Panmure Gordon is spearheaded by former Barclays chief Bob Diamond (or “Diamond Bob”) and Rich Ricci, the self-proclaimed “maddest f***er on the planet” who served as Diamond’s right-hand man at Barclays.
A case for normative determination, the two gained a reputation for their eccentric personalities (and dapper outfits), eye-watering bonuses and a raft of controversies.
In 2012, Barclays was fined £290mln under Diamond’s watch for a “serious, widespread” role in rigging interest rates as part of the Libor scandal.
Diamond would resign from Barclays following the fallout from the scandal; Ricci would retire soon after.
Ricci also coordinated Barclays’ acquisition of the Lehman Brothers, which gave Barclays a lucrative Wall Street footing for a bargain price of US$250mln (a fraction of the US$4bn Diamond was willing to pay before Lehman’s collapse).
Deal of the century indeed.
After Barclays, Diamond founded Africa-focused investment vehicle Atlas Mara with British-Rwandan entrepreneur Ashish Thakkar in 2013.
Atlas Mara raised US$325mln through a London IPO but shares almost instantly began to plummet and today are virtually worthless.
But Diamond moved on, buying the prestigious corporate and institutional investment bank Panmure Gordon in 2017 in a joint acquisition with QInvest.
Diamond would install his old friend Rich Ricci as chief executive officer in 2020, and in fairness, managed to turn the bank profitable in 2022.
It’s been quite a journey for Diamond and Ricci, and they now have some even deeper pockets than their own on their side: QInvest is an investment vehicle owned by the Qatari royal family.
Amid plunging valuations for the City’s brokers, there’s little doubt that Panmure’s big-swinging duo see a prime opportunity to consolidate the struggling brokerage market.
But it's not all grim news at finnCap.
finnCap’s possible M&A boon
Speaking with Proactive, a spokesperson for finnCap said: “finnCap, unlike other brokers, has a strong public and private M&A franchise where deal flow continues has been less hit than primarily equity-focused competitors.”
That could prove to be an ace up finnCap’s sleeve given the potential for a flurry of M&A deals in an underpriced marketplace.
Without a clear IPO window, the UK’s small- and mid-cap companies are likely seeking other exit strategies; finnCap may be well placed to benefit through its Cavendish M&A advisory offering.
finnCap was helmed by Sam Smith for 24 years until her retirement in June of this year.
“I love change. I wanted things to move,” she said of her storied career in a recent interview with Proactive.
One wonders if this is the sort of change she would have wanted.
finnCap’s shares surged over 20% following the takeover speculation.