Bidhi Bhoma has undergone a metamorphosis of late. Four years ago, the chief executive of the UK mid-market investment bank Liberum was deluged with companies paying handsomely to list on the stock market.
But a sustained initial public offering drought has forced Bhoma and his troops to keep busy through providing corporate finance advice, restructuring and identifying acquisition targets for FTSE clients.
“The tide has shifted,” said Bhoma, now deputy chief executive of Panmure Liberum, after his firm merged with its rival Panmure Gordon — in part because of the paucity of IPOs. “Five years ago we were skewed towards capital markets [IPO] revenue and had a chunk of advisory work . . . Now we are making more money out of advisory work.”
Bhoma is not alone. Across the City of London, bankers have been forced to branch out as IPOs — once a reliable revenue stream that can keep teams of dealmakers busy for a year — dwindle.
In the first half of this year, just £8.8bn was raised through IPOs and follow-on issuance; the lowest volume for 30 years, when adjusted for inflation.
So far this year there have been three IPOs on the London market and seven more on Aim. Last year there were seven main market IPOs and 10 on Aim, according to data from the London Stock Exchange Group.
By comparison, the halcyon days of 2021 saw 59 on the main market and 66 on Aim, while 2022 saw 33 main market IPOs and 12 on Aim.
London’s struggle to attract IPOs is not unique, as the rise of private capital allows more businesses to stay private for longer. But moves by large groups such as gambling group Flutter and fintech Wise to switch their main listings to New York have been a blow to London, which has also struggled to compete with the US to attract marquee tech listings.
This is the first in a series of four articles examining how firms across different sectors that serve the Square Mile are having to adapt to this listings dearth in order to survive.
For the bankers who advise companies on public listings, this has made for lean years. And it is not just fees dealmakers are missing out on: IPOs keep staff busy for up to a year, and can also forge a client relationship that will bring in subsequent — and often more lucrative — work.
Absent a healthy IPO pipeline, dealmakers have had to pivot to debt advisory services, facilitating share sales on the secondary market, and private initial offerings. Others are turning to advice on take-private deals as London-listed companies get bought up by private equity. More still are ringing up private equity clients, offering to advise on fundraising, or identify ripe acquisition targets.
Henrik Johnsson, chair of Deutsche Numis, said: “The business has been making more money from other sources of revenue, which are less highly visible than IPOs.”
As revenues from large listings dry up, bankers are busying themselves more with their clients’ day-to-day needs. Large FTSE clients still draft in bankers to advise on everything from financial results, capital market days and refinancing large revolving credit facilities. Bankers also pitch how companies can better position themselves when the deal market picks up and may advise on bid defence.
These are the sorts of tasks that traditionally sit more comfortably with corporate brokers than investment bankers.
Ross Mitchinson, CEO of Deutsche Numis, said: “The advice you’re giving might be slightly different. Whilst there has been less capital raising and front-footed M&A, there has been a lot of vulnerability assessment and bid defence work, as well as advising companies on how to deal with activist shareholders on their register.” He added that boards have been ringing for advice on capital allocation, such as share buybacks.
Bhoma reckons Panmure Liberum makes 56 per cent of its revenues from advisory work these days, with the remainder from capital markets. In 2021, he estimates that Liberum made closer to 75 per cent of its revenues from capital markets work. Competitors at Peel Hunt, which is also geared towards mid-market listings, saw investment banking revenues fall 3 per cent last year, while research revenues rose 10.5 per cent.
One senior investment banker said a lively secondary market — in which existing investors sell their shares on — had kept him busy this year. “You’ve had a lot of people, like private equity houses and founders, selling down stakes. So 2024 saw [a very high volume] of secondary sales on the London Stock Exchange . . . and this year has been gangbusters too,” he said.
LSE data shows that there was about £14.6bn of secondary selling on the main market last year, compared with about £6.5bn in 2024 and 2023.
Other bankers said companies were still raising money — just away from the spotlight of the public markets. The deep pockets of private capital allow companies to continue fundraising privately, which banks are happy to facilitate.
“Even listed companies have been asking their shareholders for cash,” said one senior investment banker, pointing to National Grid’s £7bn rights issue last year.
Barclays attributed most of the rise in its equity capital markets fees last year to “increased deal activity including fees booked on a large UK rights issue”.
Investment banks are also rushing to service the growing trend of “private IPOs”, where private companies raise funds by selling their shares directly to a group of investors instead of to the general public. Popular with the Nordic private equity group EQT, a private public offering sees a private equity firm hire an investment bank to draw up a book of buyers and sellers — much like a normal IPO — but among its existing investors rather than public market actors.
“In a way it’s M&A because you’re selling minority portions of these very large businesses, it’s just not for the public markets. That has been a new work stream that we have been working with a lot of PE houses on,” said another senior investment banker.
The new Square Mile: An FT series
Part one: How London’s IPO famine forced City bankers to pivot
Part two: Law and accountancy firms prepare for London IPO bounceback
Part three: UK PRs shun ‘Leaks over Lunch’ for crisis comms amid IPO drought
Part four Fund managers call for policy change to fuel UK’s next IPO wave
But while bankers have not been sitting idle, secondary placings, private IPOs, debt advice and refinancing agreements are comparatively shorter projects than IPOs, which can keep teams at several banks busy for a year.
One investment banker said this was sometimes preferable: “IPOs are a lot of work and have a lot more banks and big syndicates [to split fees between] . . . you can do a lot of work for a long time and earn a reasonable fee, but if you do a big equity placing it’s actually less work and pretty profitable for the time you put in.”
The banker added: “IPOs are good because you secure an ongoing client. The fees are fine but they’re not blowouts. They’re not like M&A fees.”
Even the LSEG has been forced to shift its business model. The parent group of the stock exchange has, in recent years, transformed from focusing on listings to becoming a vast data company, through its $27bn purchase of financial data group Refinitiv in 2019.
LSEG now makes most of its income from selling financial data to banks, brokers, fund managers and others, with just 4.6 per cent of its overall revenues in the first half of this year coming from equities.
Pivoting has not come easy to everyone. The bulge-bracket US banks such as Goldman Sachs, Morgan Stanley and JPMorgan Chase have armies of staff working across a range of departments, making their businesses less exposed to a downturn in listings. They have also been able to lean on their trading divisions, where market volatility sparked by US President Donald Trump’s trade war has yielded record hauls for equities traders.
By contrast, Britain’s mid-market investment banks, which historically have relied heavily on listing revenues, have found it tougher to weather the storm.
Ross Mitchinson, of Deutsche Numis, used to run the mid-market firm Numis before it was acquired by Deutsche Bank in 2023. He said that being part of a bigger bank, which had more business lines, eased the pressure.
“The small and mid-cap houses have always been very reliant on capital raising, and capital raising has been down by huge amounts over the last three to four years,” he said. But even this strategy has had teething problems. Mitchinson’s former co-CEO, Alex Ham, who helped spearhead Numis’s sale to Deutsche, moved to Barclays as the global chair of its investment banking division last month.
Bhoma tells a similar story. His legacy firm’s merger with Panmure Gordon came less than a year after the Deutsche Numis deal closed, and he said that banding together has allowed his firm to build out its capabilities in other business lines. Rival firms at FinnCap and Cenkos also merged to create Cavendish Capital Markets.
Bhoma remains optimistic for an increase in listings. “There are a lot of good companies out there. There will be private equity assets that, for one reason or another, aren’t ripe for a secondary deal. And while I think we don’t see a big deluge of IPOs for the remainder of 2025, we expect improvement for 2026.”
A pick-up in listings may not be welcome news for everyone. One contrarian senior investment banker joked: “2021 ruined everyone’s lives because we were all doing too much.”
