City broker Shore Capital in talks to buy rival Stockdale | UK News

An on-off round of consolidation among City stockbrokers will gather fresh momentum in the coming weeks when Shore Capital Markets‎ cements a deal to buy rival Stockdale Securities.

Sky News has learnt that the two firms are in advanced talks about a takeover, which could be signed as soon as next month.

If completed, a deal will create the second-largest broker to clients on London’s junior stock market, AIM.

It would also accelerate a wave of ‎dealmaking in the sector spurred by a new European regulatory regime which has triggered higher costs and restrictions on the services that firms can provide.

City sources said this weekend that under the proposed deal, Shore Capital Markets would acquire Stockdale for an undisclosed multimillion pound sum.

It would create a larger broker to AIM-listed clients and bring together two of the City’s leading equity research departments.

The Stockdale name, which was created in 2016 when experienced broking chief Mark Brown was parachuted in to revive troubled Westhouse Securities, is expected to disappear.

Under Mr Brown, Stockdale has won significant numbers of clients and led transactions including the listing of Gore Street Capital, the world’s first energy storage fund.

The firm employs about 40 people, and is thought to have been open to a takeover for several months.

Shore Capital Markets, which is part-owned by Howard Shore, a prominent Conservative Party donor and Brexiter,‎ counts main market companies such as the supermarket chain Wm Morrison among its notable clients.

If a deal between Shore and Stockdale does take place, it would be far from the sector’s only transaction under contemplation.

Last autumn, Sky News revealed that Santander, the Spanish bank, was in preliminary talks to buy the City broking firm Peel Hunt, although there has been no indication in recent weeks that those discussions are ongoing.

Macquarie, the Australian investment banking powerhouse, was also reported to be examining a bid for Liberum,‎ a privately owned firm, although its controlling shareholder played down such suggestions.

Other firms expected to participate in a round of consolidation include Cenkos Securities, which is under pressure from activist investor Crystal Amber.

Recent deals include Finncap’s merger with Cavendish Corporate Finance, a mergers advisory firm founded by the Tory treasurer Lord Leigh.

The combined company has now listed on the stock market.

The wave of recent and anticipated dealmaking has been largely spurred by Mifid-II, a Europe-wide regulatory regime which came into force last year, which has forced brokers to charge clients separately for research and trading activities.

Anxieties about Brexit’s impact on the economy has also had an impact on new share issuance on London’s AIM market, with bankers describing current activity levels as “a trickle”.

A spokesman for Shore Capital‎ Markets declined to comment on Sunday, while Mr Brown could not be reached for comment.

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