‘When markets are weak, that’s the time to strike’: FinnCap poised for deal offensive after Cenkos tie-up
The boss of London-listed investment bank and brokerage FinnCap said the firm was gearing up for a deal offensive this year after announcing a £42m tie-up with rival Cenkos Securities yesterday.
FinnCap is among a host of the City’s broking and advisory firms hit by a slowdown over the past 12 months as markets were roiled by the fallout of Russia’s invasion and soaring inflation.
However, boss John Farrugia, who took over from founder Sam Smith in September, told City A.M. the downturn had offered up an opportunity for further deals for the newly merged FinnCap and Cenkos outfit.
“When markets are weak, that’s the time to strike and get deals done. And I’m just using my M&A experience to get deals done now and grow our market position,” he told City PM
Farrugia added that a deal push was “not just about broking” and the group could potentially look to scoop up firms to bolster its M&A, debt advisory, and private growth businesses.
“We have a very, very strong balance sheet right now and I’ve already got other targets in mind,” he said.
FinnCap is looking to expand its M&A offering within its client base as part of its growth plans, which Farrugia said was his “focus right now”.
“What I’m trying to do is to make [the M&A business} complementary. We are very strong in natural resources, industrials and technology within the public markets, and I’m now looking to try and mirror that within M&A as well,” he said.
Yesterday’s tie-up came after FinnCap rebuffed the advances of City investment bank Panmure Gordon earlier in the year over a disagreement on price. Farrugia dismissed suggestions yesterday that the Cenkos deal came as a result of a slowdown for the firms, saying that both companies “can easily operate independently”.
Cenkos boss Julian Morse will now work alongside Farrugia as co-chief executive of the firm.
The deal between the pair will create the City’s largest mid-tier investment bank and sent shares shooting upwards yesterday morning before settling by the end of the day. Both firms have suffered a slump over the past 12 months, with Finncap and Cenkos shares falling 59 per cent and 49 per cent, respectively.
“What I aspire to do is create a mid-tier investment bank focused on the UK growth company marketplace, that is what I’m trying to create alongside Julian,” he added.