Cavendish says IPOs on the way as City investment bank returns to profit

Cavendish has reported a jump in dealmaking fees and said more IPOs could be on the way as the City investment bank returned to profitability.

The bank, born from the £43m merger of Cenkos and Finncap last September, posted an adjusted pretax profit of £1.8m for the six months to 30 September. That compared to a £3.6m loss during the same period last year.

Cavendish enjoyed a 42 per cent year-on-year jump in revenue to £27.7m as its investment banking fees grew 49 per cent to £24.9m.

Co-chief executives Julian Morse and John Farrugia said Cavendish’s return to profitability “demonstrates the broad appeal of our service offering and the efficiency of our platform”.

Britain’s corporate brokers have struggled with a dearth of of IPOs and a shrinking number of smaller London-listed companies in recent years, forcing cost reduction efforts and consolidation among firms.

However, bankers are eyeing a rebound for new listings on the London Stock Exchange in 2025, which could prove a healthy earnings tailwind for the sector.

“We have a solid pipeline of both public and private transactions in train, including a number of potential IPOs,” Morse and Farrugia said on Monday.

London has attracted just 10 IPOs this year, with the most notable being Raspberry Pi and Applied Nutrition – valued at £542m and £350m respectively. The 23 floats seen in 2023 marked the worst year for listings in almost three decades.

Having flagged Budget-related uncertainty last month, Cavendish said on Monday that Chancellor Rachel Reeves’ move to only partly abolish a key inheritance tax break for shares on the junior AIM exchange “recognises the vital role played by this market in the UK’s economic growth and removes any uncertainty about its future”.

Cavendish has the most AIM clients of any bank and said it had added clients on the main market in recent months.

After pruning £7m of residual costs from its merger, including job cuts, Cavendish has grown its headcount by roughly 40 to reach 197 and booked £18.3m in employee costs over the six months – up 64 per cent from a year earlier.

Cavendish’s creation came a month before Deutsche Bank completed a £410m takeover of Numis, while Panmure Gordon and Liberum merged to create Panmure Liberum in January.