March 23 (Reuters) – London-listed investment banks Cenkos Securities (CNKS.L) and finnCap Group (FCAP.L) will merge in a 21 million pound ($25.9 million) all-stock deal, creating one of the UK’s biggest financial services advisory firms focused on small-cap growth companies.
finnCap co-CEO John Farrugia told Reuters he believes the deal will spur more tie-ups in the industry and said the combined company is well-placed to benefit when markets recover from what he called one of the most difficult periods in the last 10-15 years.
He added that is was clear from the first meeting with Cenkos officials that “we want to consolidate”.
In March alone, the banking industry has been roiled by the sudden collapse of Silicon Valley Bank in the United States and the hurried weekend rescue of Credit Suisse (CSGN.S) by Swiss rival UBS (UBSG.S)
The merger with Cenkos, which comes months after Panmure Gordon abandoned its own plans to buy finnCap, will mean job cuts over the coming year, Farrugia said, without giving further details.
The two companies employ a total of around 230 people with areas of overlap in their operations.
Farrugia said he was “not concerned in the slightest” about shareholder approval of the deal, adding it had the backing of some of the groups’ largest investors.
Cenkos shareholders will get 3.19420647 finnCap shares for each share they hold, valuing each Cenkos share at 37.13 pence.
Shareholders of each bank will hold about 50% of combined company, which will be led by current Cenkos and finnCap bosses as co-CEOs.
Cenkos and finnCap had similar market capitalisations of around 21 million pounds, as of Wednesday’s close, according to Refinitiv Eikon data.
Cenkos shares fell 1.3% to 38.5 pence by 1201 GMT while finnCap shares were up 4.3%.
The merger, first reported by Sky News on Wednesday, is expected to be completed by third quarter of 2023.
($1 = 0.8125 pounds)
Reporting by Prerna Bedi in Bengaluru; Editing by Savio D’Souza, Jan Harvey, Kirsten Donovan
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