Peel Hunt returns to profit on revival in IPOs and M&A activity

Peel Hunt swung back to profit in the first half following a rebound in dealmaking volumes and appetite for public listings.

The investment bank posted a £1.2million pre-tax profit for the six months ending September, compared to a £0.8million loss over the same period last year.

It said the result reflected a ‘more positive macroeconomic backdrop,’ with more companies issuing equity and a surge in mergers and acquisitions bids involving major London-listed firms.

There were 19 active offers for FTSE 350 businesses during the first nine months of 2024, including Robinsons squash owner Britvic, cybersecurity giant Darktrace, and video games services provider Keywords Studios, compared to just two last year.

Peel Hunt also noted that IPO activity was ‘gradually resuming’ on the London markets, which have struggled to attract new listings and experienced defections to Wall Street over the past few years.

It was a joint bookrunner on the IPO for Raspberry Pi, a budget computer maker whose products are popular with amateur coders and hobbyists, and the nominated adviser and sole bookrunner for the IPO of medical technology group AOTI.

Combined with performing equity fundraises and block trades for some clients, this helped its half-year investment banking revenues jump by 30.6 per cent to £22.6million.

Turnover also soared by 29.5 per cent to £13.6million at its research and distribution arm despite UK equity outflows remaining high.

And revenue increased by 18.9 per cent to £17.6million in its execution services division thanks to rising trading volumes between April and July.

However, Peel Hunt saw trading slow towards the end of the period, which it blamed on uncertainty surrounding the US presidential election and the future of inheritance tax relief on AIM stocks.

Peel Hunt noted trading in the first few weeks of the second half was in line with management forecasts.

However, while the company said it has a ‘solid pipeline’ of corporate deals, including M&A and IPOs, it warned that some deals ‘are more likely to execute’ in the following financial year owing to persistent short-term uncertainty.

Neil Shah, director of research at Edison Group, said Peel Hunt’s investment in innovation ‘positions it well to enhance client offerings and capture future opportunities.

‘However, challenges remain, including fragile investor sentiment, particularly around AIM, and subdued activity in equity markets.

‘As a key partner for mid-cap and growth companies, Peel Hunt’s performance reinforces its importance in supporting the UK’s capital markets, though its continued success will depend on its ability to navigate ongoing uncertainties.’

Peel Hunt shares were 1.4 per cent lower at 107p on Friday morning, but have risen by around 15 per cent over the past year.