Bob Diamond in €17.8m takeover of historic London stockbroker

Bob Diamond is returning to London's financial centre with a takeover of brokerage Panmure Gordon & Co.

The former Barclays chief executive's Atlas Merchant Capital and Qatari investment bank QInvest LLC agreed to take the 141-year-old stockbroker for £15.5 million (€17.8 million) in an all-cash deal, according to a statement on Friday. QInvest is already Panmure's biggest shareholder.

Diamond, 65, who stepped down from Barclays in 2012, has signalled a growing interest in pursuing bank takeovers in Europe in recent years, saying there are “terrific” opportunities as the region’s largest firms retrench. While his fund is buying the historic London stockbroker where former prime minister David Cameron’s father once worked, Panmure Gordon now acts on tiny deals in a hotly competitive market.

“I suspect the last thing Bob wants to do is create Barclays 2.0,” Panmure Gordon chief executive Patric Johnson said in a telephone interview. Johnson said he hadn’t met the American and that “this is ultimately about his fund making an investment and not about Bob having a seat at the table.”

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The offer is a 68 per cent premium over Panmure Gordon’s closing price on Thursday, which the brokerage’s independent directors have unanimously endorsed. Atlas Merchant will take a controlling stake in the company, while QInvest will maintain its 43.43 per cent holding. Panmure Gordon’s stock jumped 70.6 per cent to 101.5p for its biggest intraday gain in more than 15 years.

Junior exchange

Diamond’s fund is taking on a company that specialises in small deals on London’s junior Alternative Investment Market (AIM) exchange, a sector where independent stockbrokers have struggled to make money. The firm’s most recent transaction was a £10 million share sale for specialist UK bank Private & Commercial Finance Group. However, Panmure Gordon now plans to hire senior merger advisory bankers, strengthen its equities division and expand its product offering, according to the statement.

Atlas Merchant wants to “build a larger, successful boutique investment bank”, Matthew Hansen, head of UK and Europe for the private-equity firm, said in the statement. “This long-term stabilisation and development can only realistically be achieved as a private company, out of the glare of the public market and the effects of share price movement.”

Panmure Gordon chief executive Johnson has sought to restore his firm to annual profit since he was put in charge in February 2016, while competitors such as China's Haitong Securities have been forced to make cuts in London. Panmure Gordon drew takeover interest last year from Mehmet Dalman, the former investment banker and chairman of Welsh soccer club Cardiff City, according to the Sunday Times in August. The firm required a £5 million equity funding line from QInvest in February last year and had been looking for fresh capital before finding Atlas Merchant as a partner.

Purchases

Diamond is also an investor in New York brokerage South Street Securities Holdings Inc, which earlier this month agreed to buy Lebenthal Holdings LLC’s asset-management business and a stake in broker-dealer Lebenthal & Co. Such purchases mark a shift for Diamond, who previously focused on acquiring African banks through his Atlas Mara vehicle, which is separate from the Atlas Merchant private-equity firm he set up at the end of 2013.

Months after taking a stake in South Street in mid-2015, Diamond said he saw an “incredible entrepreneurial opportunity” to invest in financial companies competing with so-called systemically important banks that are facing increasing scrutiny from regulators. His Atlas Merchant firm acquired the Athens- based consumer finance arm of France’s Credit Agricole SA last month as it looks for more European deals.

In January, people with knowledge of the situation said Diamond was mulling options for Atlas Mara, including taking it public or merging it with another firm operating in Africa. At the time, the discussions were at a very early stage.

– Bloomberg