Numis is preparing to launch more initial public offerings in the coming weeks as the London-based broker and investment bank continues to capitalise on the booming market for fundraising in the UK.
In a trading update on Thursday, Numis said the capital-raising environment remained active across both public and private markets, with mergers and acquisitions likely to stay at “elevated levels” as the UK emerged from the pandemic.
The UK has seen a boom in M&A transactions since the start of the year as private equity funds have sought to use their vast pots of money to buy public companies, the largest of which — the £7bn takeover of supermarket chain Wm Morrison — will be decided in a one-day auction on Saturday.
The IPO market has also returned strongly after an enforced slowdown during the worst months of the pandemic last year. Numis acted as one of the bookrunners for Oxford Nanopore, which made its market debut in London on Thursday.
Revenues for Numis’s investment-banking arm are expected to exceed £150m this year, the company said, rising from slightly more than £100m in 2020. This extra work will underpin an “excellent year” for the company, it said.
Numis said there had been a pause in IPO activity and more subdued markets in general over the summer period, but this was offset by the completion of a number of significant M&A transactions.
This led to a strong performance in the final quarter of the financial year ending in September, it said, when it had also invested more to expand its investment banking team.
Revenue for the second half will exceed the level achieved in the same period last year, Numis said, which itself featured a significant volume of Covid-related fundraisings.
Full-year revenue is expected to be in the region of £215m, from £154.9m in 2020, with pre-tax profits “significantly higher” than the previous year’s £37.1m.
Numis said it was acting on more deals, both public and private, for non-UK issuers, and in particular in the digital consumer and fintech sectors.
Its equities team also had a strong second half, but Numis said revenue was lower than in the “exceptional” first half when market volatility caused a surge in trading. Rival CMC Markets was this month forced to warn on profits after trading volumes waned in recent months.
Numis said it had increased the capital allocated to trading books to deliver “good, and consistent, trading profits throughout the year”. Money generated from company research — which has been disrupted by the Mifid ll reforms — was “resilient”, it said.