Finance

City broker Peel Hunt eyes EU and US growth after £112m London IPO

City broker and mid-market investment bank Peel Hunt will be opening a new office on the continent after Brexit, expanding in the US, and making a significant technology push after raising £112m in a UK listing.

Peel Hunt returned to the public markets for the first time in two decades with an initial public offering on London’s AIM segment that values the firm at £280m. The £40m taken in new capital will be used to fund its next stage of growth, with the broker capitalising on the boom in fundraising and deals in Europe with the listing.

Steven Fine, Peel Hunt’s chief executive, said a key priority was to open an office in Europe next year to allow it to serve its EU clients after Brexit.

It has chosen Copenhagen, and will start with three to four employees, he told Financial News.

“Europe beckons,” said Fine. “A consequence of lack of equivalence from the regulators has meant that we’ve had to consider seriously a physical presence on the continent. And that’s something we’re now absolutely committed to do. We see expansion over there as a core part of the next stage of our growth.”

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The broker, which has traditionally focused purely on the City of London, will also look to expand in the US, Fine added. “We’ve had distribution in the US for some time, but we see a huge opportunity to grow our footprint and market share there to distribute the firm’s research, deal flow and corporate access,” he added.

The firm has benefited from the boom in UK dealmaking, as equity capital raisings have surged and US private equity firms have swooped on British companies this year.

It made revenues of £196.8m in the last financial year, up from £95.5m for the prior 12 month period. As of August, it had 157 corporate clients with an average market capitalisation of £775m.

The implementation of the second iteration of the Markets in Financial Instruments Directive hit City brokers hard, with many calling for smaller players to consolidate in order to survive. However, performance at rivals including Cenkos and finnCap Group this year suggest prospects for the sector have improved.

“In an industry that’s been characterised by consolidation over the last 10 years, it’s been a really terrific opportunity to tell a broad group of institutions what we do and how we do it,” said Fine.

Fine added that the bank is likely to continue to hire dealmakers, but a key focus will also be expanding its team of technologists that currently comprises 13% of its 300 employees.

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“One of the key things we recognise here is that we are sitting on a gigantic amount of largely unstructured data that we’ve built up over the last 10 years,” said Fine. “There are all sorts of opportunities for us to grow our technological presence, whether it’s data lakes, AI or machine learning – all of those areas we think are really important.”

To contact the author of this story with feedback or news, email Paul Clarke

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