BROKER Panmure Gordon has sold its loss-making US subsidiary to management for a nominal sum as it attempts to focus on its core UK business.
Panmure aquired ThinkEquity in 2007, just before the financial crisis but the current board feel that the San Francisco-based firm is unlikely to “produce an acceptable level of profitability in the foreseeable future while remaining its subsidiary”.
The subsidiary’s substantial losses have been a constant drag on group profits, unlike the British arm which has made money in 18 of the last 20 years.
Disposing of the firm for a nominal sum will mean that Panmure Gordon’s year-end results – due later this month – will make gruesome reading for investors.
ThinkEquity had a goodwill value of around £20m and Panmure will also have to pay costs associated with the disposal.
“Market conditions have changed beyond all recognition since the acquisition of ThinkEquity, and 2011 was again a much more difficult year than we had expected. It has failed to achieve profitability, and in the view of the board has a far greater chance of success owned and managed by the local management under a partnership model,” said Ed Warner, chairman of Panmure Gordon.
Panmure has also suffered from a delay in a number of big investment banking deals that forced it to issue a profit warning in November 2011.
Shares in the firm closed down 3.5 per cent at 13.5p.