Shares in Peel Hunt have slumped to their lowest level since its listing last year after the British broker warned that corporate deals have been delayed owing to investor concerns over the economy and the threat of war in Europe.
After a strong year for mergers, acquisitions and initial public offerings in 2021, Peel Hunt said that investor sentiment had been hit since the start of the new year by fears over inflation and interest rates.
The small- and mid-cap broker said that global geopolitical events had also “negatively impacted market conditions and investor sentiment”. It added that as a result, the backdrop for capital markets activity had been particularly challenging and warned shareholders that its earnings would be lower than expected.
The Bank of England has already increased rates once this year as inflation has spiralled higher, with further increases forecast in 2022 as the central bank seeks to ease the burden of higher living costs.
London’s share index has also been rattled by the conflict between Russia and Ukraine. Companies raised the most money on the London Stock Exchange last year since 2007, according to data from Dealogic, but new listings have been scarce since the turn of the year. Advisers say that companies are waiting for greater stability in the markets before proceeding with new share offers.
In a trading update for the financial year ending March 31 2022, Peel Hunt said there was a strong pipeline of corporate transactions but a number of deals had been delayed.
There had also been a slowdown in execution and trading activity, it added. Trading revenues were boosted last year after investors sought to take advantage of stock market volatility.
The company warned that full-year revenue would be “marginally” lower than the bottom of the previously guided range of £130mn-£140mm, and earnings would be lower than market expectations.
Shares dropped by about a sixth to 148p, significantly lower than the 228p offer price at which it floated in September last year.
The broker added its investment banking division had won new corporate clients, taking the total number to 163, and said full-year revenues in the division would “compare favourably” with pre-pandemic levels.
Its research and distribution business continued to win market share, it added, and was performing in line with expectations.
The broker raised £112mn in its IPO to fund a European office to serve EU clients after Brexit and expand its technological capabilities.
Peel Hunt said on Wednesday it had made progress in a number of key areas including development of technology, the roll out of a digital strategy and towards establishing a platform in the EU.
