Cavendish shakes off M&A woes to swing to profit
Cavendish swung back into profit in the latest financial year despite a sharp drop in revenue in its mergers and acquisitions division.
The London-listed investment bank turned a slim £700m in pre-tax profit for the year ending March 31 but this marked a hefty shift from the £4.3m loss in 2024.
The firm said its adjusted profit, which it describes as a “clearer view of core operating performance” due to excluding non-cash and one-off items, was £3.7m – a swing from a £1.8m loss previously.
This came as the group stripped back operations in the last year and reduced non-employee costs by 16 per cent to £14.8m.
The cost-cutting helped offset a slump in M&A volumes which led to a 55 per cent drop in related revenue. The bank added a 23 per cent rise in takings from equities issuance also helped shake off M&A woes.
Investment banking revenue edged up to £50m, from £44m previously, as retainers remained steady and transactions jumped nearly £5m to £38.2m.
Total assets dipped to £77m, down from near £80m the year prior.
Cavendish said it had been “consistently profitable” throughout the year and was able to deliver a 0.8p dividend for the year.
Cavendish: Investors rotating out of US assets
The firm said it maintained its positions as the “leading broker and adviser to AIM-quoted companies” and won 21 new quotes clients whilst completing 70 transactions. Cavendish accounted for more than 60 per cent of capital raised in the last six months as it held a “commanding share of UK IPO activity”.
The investment bank said the M&A market and pipeline “remained strong” due to the rising numbers of entrepreneurs exploring exits and increase in private equity firms snapping up listed businesses.
Cavendish said: “After a challenging period for UK and European equities, sentiment may finally be turning.”
The firm said US policy volatility was increasing the risk of owning US assets and this prompted a rotation out of US assets, which was “exemplified by the weakness in the US dollar” and relative performance of UK equities.
Co-chief executives Julian Morse and John Farrugia said: “This year we have sharpened our focus on strategies for organic growth, investing in capabilities that broaden our service offering and deepen our engagement with a diverse and evolving client base: from high-growth disruptors to established corporates, institutional investors and private equity.”
They added: “We move forwards with strategic clarity and a firm-wide commitment to delivering long-term value for our clients, our people and our shareholders.”
Cavendish was the subject of takeover speculation earlier this week but quickly poured cold water on the rumours.
Smiths and WIlliamson (S&W) had approached the investment bank with interest in a takeover of its deals unit, Sky News reported, but Cavendish rejected the notion of any deal.
Shares spiked 15 per cent on the news to a near 10-year high.