By Yadarisa Shabong and Chandini Monnappa
(Reuters) -Former Barclays veterans Bob Diamond and Rich Ricci have agreed an all-share merger of Panmure Gordon and UK rival Liberum, the firms said on Tuesday, creating Britain’s largest independent investment bank amid an extended dealmaking slump.
The merger is intended to steer the enlarged group through challenging times for Europe’s investment banks, with business hurt by rising geopolitical tensions and interest rate uncertainty.
It comes hot on the heels of Cenkos Securities and finnCap’s merger to create Cavendish, as well as Redburn and General Atlantic’s formation of Redburn Atlantic and Deutsche Bank’s swoop for Numis Securities.
“It is a sign of the times,” said Russ Mould, investment director at online broker AJ Bell.
“Panmure Liberum will have a big client base, the biggest in London, which is a good start; and it will increase the pressure on smaller players, especially if the levels of IPO and secondary activity remain modest and the fee pool depressed.”
Global investment firm Atlas Merchant Capital, led by Diamond, will provide financial backing and liquidity for the enlarged group, Panmure Liberum, the companies said without disclosing the value of the deal.
Diamond’s relationship with Panmure began in 2017, when his firm teamed up with an investment vehicle owned by the Qatari royal family to buy the company.
Panmure CEO Ricci will take the helm of the merged entity while Shane Le Prevost, founder and executive director at Liberum, will take the role of non-executive chair.
The deal is expected to bring cost savings and balance sheet strength to invest in growth and diversification, the firms said.
“This merger will lift the level and quality of service to mid and small-cap businesses and investors in the UK and beyond,” former Barclays CEO Diamond said in a statement.
Ricci served in several top roles during his 19 years at Barclays, including co-CEO of corporate and investment banking as well as chief operating officer of Barclays Global Investors.
Data from consultant EY this week showed a 3% fall in European M&A deals in 2023, with 641 across the region, compared with 661 in 2022.
“Over the last three years we have doubled our corporate client base, made significant investment in talent and materially increased our share of the UK market across our trading and execution capabilities,” Ricci said.
Panmure Liberum will have more than 250 quoted corporate clients and would be ranked No.1 by deal volume for UK initial public offerings under 1 billion pounds in market capitalisation over the past five years, the merger statement said.
(Reporting by Yadarisa Shabong and Chandini Monnappa in BengaluruEditing by Sinead Cruise, Tomasz Janowski and David Goodman)