City broker and investment bank Finncap said it is seeing “green shoots” of recovery in the market as the firm notched a jump in revenues after swinging to a loss last year.
The London-listed firm revealed it slumped to a loss of £1.7m in the year to March, down from a profit of £9.3m in the previous year, on the back of a barren period for London’s capital markets.
The City’s brokers and smaller investment banks have weathered a bruising 12 months as the ripples of war in Ukraine and rapid rate hikes choked off appetite for deals and listings.
Finncap raised just £160m through 19 listings through the year, down from £660m across 25 deals the year before.
Mergers and Acquisitions revenue also tumbled in the year to March, with Finncap advising on 18 private deals worth £625m – down from 22 deals worth £1.3bn the year prior – and six public M&A deals with a value of £625m, down from 22 deals worth £1.3bn.
Boss John Farrugia told City A.M. the firm had begun to see signs of a rebound however, as first quarter revenues surged back to 32 per cent to £8.7m in the three months to June.
“I think it will take time, but we’re beginning to see green shoots and obviously it seems like other [firms] are beginning to see some form of green shoots as well,” he said in an interview.
He added that the firm’s dealmaking teams were seeing a rebound in the smaller end of the market where Finncap specialises.
The results come as Finncap prepares to merge with its rival Cenkos later this year after striking a £43m deal in March. Farrugia admitted uncertainty around the deal was weighing on its ability to snap up some clients.
“Uncertainty doesn’t help. We can all sit there and know that the deal is going to happen and it is going to happen, but it makes it a little bit harder to try and win a new client until the deal is actually done,” he said.
“We’re ready to go. I just want the deal completed so we can begin to execute [our] strategy.”
City investment banks and brokers are hoping for a rebound in public markets activity after the IPO market has been largely shuttered over the past 12 months. The London Stock Exchange registered just 18 new floats in the first six months of 2023, raising a cumulative £593m – roughly the same as last year, according to figures from EY.
Farrugia said reforms tabled by the Chancellor on Monday to revive the market were a welcome step though any benefits were some way off.
“We are certainly seeing signs of growth within capital markets and obviously, the Mansion House statement is great to hear,” he added. “ I know it’s gonna take a few years to come through or periods come through, but it’s great to hear.”