'Smear' fury over £160m Centaur bid

FAST-GROWING stockbroker Numis is embroiled in an increasingly bitter war of words with City rivals this weekend amid allegations of a smear campaign.

It has been criticised for allegedly outbidding one of its clients to lead the flotation of magazine and conference group Centaur Publishing.

The revelation has prompted rivals to claim that Numis, chaired by Michael Spencer, is putting profits before client relationships.

Business magazine publisher Incisive Media alleged that Numis, which acts as its broker, did not have permission to bid in the auction for Centaur.

It is an allegation that Numis, which won with a bid worth about £160m, strongly refutes.

The chief executive of an investment banking firm said: 'Numis has clearly upset clients.' He said several contacted him this week because they were unhappy over the Centaur situation.

'Some clients feel that the deal has become more important to Numis than the relationship with them,' he said.

Numis chief executive Oliver Hemsley said: 'Numis acts as broker to Incisive, not its adviser. We were specifically cleared to act for the management team of Centaur.'

Hemsley said that Chris Stibbs, development director of Incisive, had cleared Numis in a phone call after first discussing the situation with the publisher's board. He added: 'The transcripts are available to Incisive.' But other City bankers believe the situation could hurt Numis's business.

One said: 'If Numis has documentary evidence that they are in the right, they should publish it. It is the only way to get themselves out of this situation.'

There is increasing speculation that Numis will find it hard to float Centaur at a valuation of £160m, which was almost £50m more than Incisive's bid. And the initial valuation of dentist chain James Hull, which Numis is also floating, is also said to be optimistic at more than £50m.

One analyst said: 'Numis deals with small companies that look for succour, support and loyalty from their brokers and advisers. The last thing they expect is for their brokers to turn them over.'

Some clients, such as Domino's Pizza and support services group Watermark, have lined up to signal their support for Numis, which has increased its client base from 25 to 65 in 18 months.

Hemsley believes that Numis is the subject of a smear campaign, but City bankers reject such allegations. One said: 'I think Numis is a stockbroker in a hurry. There is a ravenous desire to succeed. These concerns have been around for a while, but the Centaur situation has brought them to the forefront.'

The City is still astounded at the collapse of Gympie Gold in December, just one month after Numis had raised A$25m (£10m) in a share placing for the Australian mining company.

Gympie Gold's mine was evacuated after abnormal levels of gas were detected, which subsequently ignited.

One stockbroker said: 'This showed a grotesque lack of due diligence. The gas leak should have been picked up in a technical report.'

Hemsley rejects this: 'There was a major fire. I can't legislate for fires. I am not uncaring about this. The money was due to be paid in two tranches and I stopped the second tranche from being drawn down.'

He snapped: 'These are easy criticisms for our competitors to lob. If they focused on what they do rather than criticise others, they would do so much better.

'I am building a business and quite evidently I must have trodden on some toes.

'These people don't want to work hard themselves. This is all just scuttlebutt.'