Numis: London’s drought to continue

One of Britain’s most respected independent investment banks warned that the drought in London stock market flotations is likely to continue until at least the fall.

Numis stated that there was a “continued shortage” of equities capital market deals, which had impacted revenues at the investment banking division in the six months prior to March.

The combination of a lower performance from the equities trading company and a dearth in transactions is expected to have caused overall revenues to drop by around 14% to about £64 million in the first half compared to the previous year.

It warned that a revival of initial public offerings (IPOs) which have slowed down since the last quarter of 2021 was not possible.

Numis stated that “we believe it is unlikely that IPO markets will see any meaningful pickup-up during the remainder our financial year up to September 30, 2023.”

Although it is smaller than some of the largest American investment banks in Britain like JP Morgan and Goldman Sachs, Numis, which is based in London, has carved out a niche for itself as an advisor on several takeovers and flotations over the past few years.

It collaborated with Micro Focus International to assist in the acquisition of OpenText, a Canadian rival software company, for £5.1 billion. This deal was completed earlier in the year. The bank also advised Countryside Partnerships regarding the takeover of Vistry Group by housebuilder Vistry Group for PS1.3 billion, which was completed in November.

Co-chief executives of Numis are Alex Ham and Ross Mitchinson. The former manages Numis’ investment banking business while the latter oversees its equities division. It warned previously that the IPO slowdown would mean that its equities capital market business, which deals with share flotations, will have its quietest year in a decade.

According to the group, “overall market levels for issuance remain at historic lows” and “investor sentiment towards the UK remains relatively weak.”

Numis shares, which are listed on London’s junior Aim exchange, dropped 3 3/4 p or 1.75 percent to 211 1/2p.