Fundraising and dealmaking activity boost N+1 Singer profits

N+1 Singer has become the latest City stockbroker to report a boost in profits last year as fundraising and dealmaking activity picked up, although the group warned there is still too much capacity in the small and mid-cap market because of falling secondary commissions.

N+1 Singer's revenue increased 5 per cent to £30.9m and pre-tax profit was up 8 per cent to £8.8m in the 12 months to December 31, according to documents filed at Companies House. The company has announced a dividend of 59.5 pence per share, an increase of 12 per cent.

Two standout deals for N+1 Singer in 2014 were a £112m equity raising and bond restructuring for drug delivery company SkyePharma and a €301m placing and listing of Blackstone/GSO Loan Financing.

N+1 Singer follows rivals such as Cenkos Securities, Shore Capital and Panmure Gordon, all of whom reported a marked pick-up in performance during 2014, boosted by a rising tide of initial public offerings.

Despite these positive headwinds, UK brokers are currently grappling with new regulation that is forcing the separation of payment of research from trading commissions. As a result, there are too many players fighting for fewer secondary trading commissions, which is expected to drive further consolidation in the sector.

Tim Cockcroft, chief executive of N+1 Singer, said: "Commission unbundling is having its effects. It's forcing us all to be more business like . . . There's been overcapacity in the market for a long time. I think people will be more specialised in their areas, be it market-caps or sectors."

Rival small and mid-cap broker Westhouse Securities is an example of this. Since executive chairman Mark Brown joined in September following its delisting from Aim, the firm has stopped covering the mining, aerospace and capital goods sectors, and now focuses on six main areas.

Westhouse has just hired Andy Crossley as managing director and deputy to Mr Brown. Mr Crossley joins later this month from Peel Hunt, where he spent four years as head of equity capital markets. Before that he was a UK small-cap fund manager for more than two decades, mainly at Invesco Perpetual.

Both N+1 Singer - the result of a merger between stockbrokers Singer Capital Markets and N+1 Brewin in 2012 - and Westhouse, which a year earlier bought Arbuthnot Banking Group's securities arm, expect to see more consolidation in their market.

Westhouse's Mr Crossley said: "More capacity needs to come out of the market. There just aren't the secondary commissions you need to keep these companies viable."

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