Panmure Gordon has disclosed a pre-tax loss of £7.2 million for the fiscal year ending 31 December 2023. This disclosure arrives ahead of its crucial merger with Liberum.
Despite the challenges, the bank slightly improved from a £16.3 million loss in 2022 and saw a rise in dealmaking fees.
Financial Performance
Panmure Gordon, an esteemed investment bank, has faced sustained financial difficulties, recording a £7.2 million loss for the year ending 31 December 2023. This represents an improvement from the previous year’s £16.3 million loss. The bank’s revenue climbed to £31 million, up from £27.6 million in 2022, driven by a significant 22 percent increase in dealmaking fees.
Despite these positive trends, the overall earnings were adversely affected by a sharp decline in IPOs and a decreasing number of small London-listed companies. This continued downturn necessitated aggressive cost-cutting measures and further consolidation within the sector.
Operational Adjustments
With revenues under pressure, Panmure Gordon had to make substantial operational changes. The bank reduced its employee numbers by 23, bringing its total workforce down to 124 last year. Correspondingly, compensation expenses also dropped to £23.5 million from £29.5 million in 2022.
The operational adjustments were not limited to workforce strategy. In July, the bank expanded into private capital and debt advisory sectors and strengthened its US operations by recruiting former Numis employees.
Merger with Liberum
January saw Panmure Gordon merging with Liberum, a move that created the largest advisory firm for London-listed companies. The merger has brought together 250 UK corporate clients and a combined staff strength of 288 across the UK and North America.
Rich Ricci, who previously led Panmure Gordon, was appointed CEO of the new entity, while Bidhi Bhoma from Liberum took on the role of deputy CEO. This strategic merger follows other significant consolidations in the industry, including Deutsche Bank’s takeover of Numis and the merger of Finncap and Cenkos.
Market Environment and Influences
Part of the issues faced by Panmure Gordon and similar firms stems from the broader market environment. A noticeable decline in initial public offerings (IPOs) and an overall reduction in the number of smaller London-listed companies have been detrimental.
These market shifts have led to decreased revenues and heightened the need for operational efficiency and strategic mergers to stay competitive. The trend towards consolidation is seen as a survival strategy in a shrinking and increasingly challenging market.
Leadership and Strategic Direction
Ex-Barclays chief Bob Diamond’s Atlas Merchant Capital acquired a controlling stake in Panmure Gordon in 2018, which marked the beginning of significant leadership changes. Rich Ricci, a Barclays veteran, was appointed to steer the company as CEO in 2020.
The merger with Liberum represents a culmination of these strategic efforts. Under the joint leadership of Ricci and Bhoma, the newly formed Panmure Liberum aims to navigate the complexities of the UK corporate broking landscape while capitalising on their extensive client base and combined expertise.
Future Prospects
The future for Panmure Liberum appears cautiously optimistic despite historical losses. The strategic expansion into private capital and debt advisory units alongside the bolstering of US operations indicates a proactive growth approach.
Moreover, the firm’s ability to make tough operational cuts while simultaneously seeking growth opportunities demonstrates a balanced strategy aimed at long-term stability and profitability.
Panmure Gordon’s £7.2 million loss in 2023 underscores the challenging landscape of UK corporate broking. However, the merger with Liberum and strategic expansions signal potential for recovery and growth.
The combined expertise and expanded client base provide a robust foundation for navigating future market challenges and capitalising on emerging opportunities.