Tuesday, June 18, 2024 6:00 am
Peel Hunt’s boss has said the city should be “very concerned” about its future as he defended a series of warnings issued by the investment bank about the state of the UK’s capital markets.
The London-listed bank, which last week revealed its losses had more than doubled last year, was among the loudest voices raising alarms about London following a slump in capital markets activity and the lack of new listings.
In a series of notes to investors, Peel Hunt warned of a “ruthless” exodus from London markets and said the smaller segment of the exchange was at risk of being gutted without swift action from regulators and the government.
However, the tone of the messages has upset some in the Square Mile, who warn the bank’s comments could fuel the negative narrative that has swept the capital in recent months.
Speak with City AMSteven Fine, the head of Peel Hunt, defended the warnings, saying the smaller part of the London Stock Exchange was at risk of being “eroded”.
“For me the question is very simple: do you believe there is a future for public markets in Britain? Because if you do that, you should be very concerned about the sheer size and scope of the companies that are leaving, and the lack of replenishment,” Fine shared. City AM
“If you don’t care, if you’re in the camp that says I don’t care – pardon my language – then that’s fine. But if you do care, you should look at the hundred companies that left.”
Fine added that there will “always be a FTSE 350”, but “eroding the ecosystem” that supports smaller businesses is “damaging”.
“If you don’t care, if you’re in the camp that says I don’t care – pardon my language – then that’s fine. But if you do care, you should look at the hundred companies that left.”
Peel Hunt chief Steven Fine
The comments point to the exodus of companies from the smaller end of the London Stock Exchange, particularly from the junior AIM market, where mid-market companies like Peel Hunt make the lion’s share of their money.
In its annual results last week, the bank said it had slumped to a loss of £3.3 million in the year to March, compared with a loss of £1.5 million in 2023, with “continued cost pressures” driving the increase of 4.3 percent. turnover to £85.8 million.
Mid-market banks and brokers have been starved in London after just 23 companies floated on the London Stock Exchange last year, a drop of around 60 percent from an already quiet 2022.
However, Fine said there are now promising signs of recovery on the horizon.
“The UK market feels like it is about to turn around and reassert itself,” he added.
The market is buoyed by the prospect of a record-breaking attempt from fast fashion giant Shein and the successful debut of computer manufacturer RaspberryPi in recent weeks, a deal brokered by Peel Hunt.
“If you had to pick an example of a company whose IPO market you wanted to reopen, you couldn’t have chosen better than a company like Raspberry Pi,” Fine said, pointing to the fact that it was a U.K.-based technology. company.