The rapid decline of London’s stock market has triggered the merger of two of Britain’s biggest independent stockbrokers, as City firms seek to bulk up to weather the downturn.
Panmure Gordon and Liberum are combining in a deal led by the former boss of Barclays and racehorse tycoon Rich Ricci.
The two brokers will merge to become Panmure Liberum, led by Mr Ricci as chief executive and backed by ex-Barclays chief Bob Diamond’s fund Atlas Merchant.
The two executives have a long association together, having worked at Barclays in the run up to and aftermath of the financial crisis. Mr Diamond and Mr Ricci were two thirds of a trio known as “three musketeers” at Barclays’s investment bank.
The tie-up of two of the capital’s biggest stockbrokers reflects a slowdown in London’s takeover and new listing activity, which is forcing firms to combine and cut costs.
Last year saw Deutsche Bank buy Numis and finnCap merge with Cenkos Securities to form Cavendish.
Edison’s research director Neil Shah said the Panmure Liberum tie-up was “another strong signal that urgent action is needed to boost London’s status as a global fundraising centre”.
Only 23 companies floated last year versus an average of 60, according to EY, and M&A has also been its slowest since 2013.
Panmure lost £16.2m in 2022 after revenues slumped more than 40pc to £27.3m. Liberum made the first loss in its history in 2022, swinging £9m into the red.
The two companies said the merger would allow the business to be “consistently profitable through the cycle”, while clients would benefit from a larger pool of capital.
Mr Ricci announced the deal to staff at Panmure’s London office on Tuesday.
Multi-millionaire Mr Ricci, self-described as the “maddest f***er on the planet”, is one of the most colourful characters in the City.
The American-born banker, who lives in the UK, is well-known in horse racing circles as the owner of several top racehorses trained by Willie Mullins.
A regular fixture at the Cheltenham Festival, where he often sports dark sunglasses, a fedora and a tweed suit, Mr Ricci once landed £400,000 in one afternoon after three of his charges romped home to victory.
The balding banker, known for his playful sense of humour, has also raised eyebrows in recent years by sporting a long mullet, which he said he grew to let “the wind blow through something.”
Panmure Gordon and Liberum started talks about a merger in the summer before the deal started to take shape late last year.
Liberum chief executive Bidhi Bhoma, who will become deputy chief executive at the new business, said he hoped the merger would allow the company to “win a lot more business”.
Mr Bhoma said some minimal job losses were expected as a result of staff overlaps but said most of the cost reductions would come from other areas.
He said: “We saw improving market conditions in 2023 and we would expect that to continue. We could have happily stayed trading on our own but this combination is very compelling. We come together at a time when the market is improving.
“We’re not saying the market is flying but we did have better conditions last year than 2022.”
Panmure president Richard Morecombe, who heads the equities business, said: “You can’t hide from the fact that equity capital markets have had a difficult time but we are seeing signs of a pickup. We are positioning ourselves to take advantage of an uptick.”
Liberum was founded in 2007 by Shane Le Prevost after he stepped down as chief executive of Collins Stewart, another stockbroker that was acquired by Canaccord. He will become chairman of Panmure Liberum.
Panmure Gordon was founded by Harry Panmure Gordon to finance trade overseas in 1876.
The broker is well-known for its links to foreign secretary Lord Cameron. His father, Ian Cameron, was a former senior partner.
Panmure has changed hands several times throughout its history, with US NationsBank, WestLB, Lazard, Charles Stanley and Qatari investor QInvest all owning the business at various times.
Only six clients overlap between Panmure and Liberum out of their combined client base of 250 companies.
The Panmure Liberum deal is an all-share merger, meaning no cash is changing hands. The merger is structured as an equal split, with both Liberum’s shareholders and Panmure’s backers holding 50pc of the combined group each.