Two of the City’s most established names, broker finnCap and Lord Leigh of Hurley’s advisory firm Cavendish, joined forces on Wednesday amid a shake-up of the broking sector.
FinnCap, set up by Sam Smith in 2007 and chaired by veteran financier Jon Moulton, said it was buying Cavendish, a 40-strong boutique advisory company co-founded by Tory party treasurer Leigh. The pair hope to float the combined business on the AIM.
Cavendish advises entrepreneurs and company owners on selling up.
The move comes as new EU rules continue to affect the way brokers can charge for research, denting their revenues and spurring consolidation.
Last week broking companies SP Angel and Northland Capital said they were in merger talks, while in September it emerged bank Santander had been eyeing broker Peel Hunt.
But Smith, whose finnCap advises 125 listed firms, said the deal has been in the works for some time and it is not a defensive move.
She added: “We’re putting together two leading players. We didn’t just want to buy another broker. It’s been difficult for the industry but it hasn’t been too painful for us, [research] is a small part of the business.” It expects to float in December, giving it a market value of £46 million, raising £6 million. That’s despite several high-profile IPOs which have either been shelved or had a bumpy ride following their floats.
Smith said: “It’s probably not the best time to be floating but that’s a worry if you haven’t got the money. We have very supportive shareholders. The money is there already.”
Leigh said: “Entrepreneurs come to us. In the current market they want to have all the options in one house. We can do that.”
