Broker Numis blames Brexit for ‘paralysed’ deals

Brexit uncertainty paralysed deal-making at stockbroker Numis last quarter after political in-fighting in Westminster put off companies from raising money.

The broker, considered a bellwether for Britain’s mid-cap stocks due to its large market share, did 25% fewer transaction between October and January in a hiatus in deal-making. Money made from buying and selling shares for clients was also down by a quarter.

Co-chief executive Ross Mitchinson said: “Some of the things in the pipeline have either been deferred or gone away due to the political situation. It’s all about Brexit. People are a bit paralysed until we get more certainty.”

London Stock Exchange Group figures obtained by the Standard show January was the worst start to the year for stock market flotations since 2013, with just two listings in London.

Mitchinson also pointed to data which shows only £6.6 billion of new money was raised between October and January. Last year nearly £30 billion was raised over a 12-month period.

On the trading side, Numis, which has nearly 220 UK-listed companies, makes money by taking a percentage cut of the value of the trade.

A market plunge last quarter meant lower stock prices and less money for Numis to make.

Small and mid cap shares, where Numis specialises, have taken a battering since October with stocks on the junior markets down 20% alone.

Despite the problems Numis managed to get away the flotation of funds platform AJ Bell last year.

Mitchinson said: “We’re getting on with things. We’re not sat twiddling out thumbs but a lot of things won’t come to fruition — IPOs or front-footed M&A — until after we get a resolution on Brexit,” He added that a no-deal Brexit and possible recession could affect some of the firm’s clients.

Brokers such as Numis have faced headaches from new EU rules called Mifid II that have forced fund managers to pay for research, driving many into difficulties. However the company said the current set-up with its customers was “encouraging” because it had not been damaged by the change.