BlueGem Capital Backs Panmure

LONDON (Reuters) – Private equity firm BlueGem Capital Partners will invest 15 million pounds ($22.3 million) in Panmure Gordon & Co (PMR.L) in return for a 40 percent stake in the 130-year-old British stockbroking firm.

Panmure said on Wednesday it would use the money to expand into new business areas while BlueGem said its investment would help the company take advantage of market turmoil by hiring from the ranks of bankers who have lost their jobs in recent months.

The deal forms part of a placing of 72 million new shares, of which BlueGem will buy 63.65 million. The issue, priced at 24 pence a share, or a 29 percent discount to Tuesday’s closing price, will raise a total of 17.3 million pounds.

BlueGem had originally approached Panmure about investing in the company, the stockbroker said.

Panmure Chief Executive Tim Linacre told Reuters the company had seen an improvement in business conditions in recent weeks and that he wanted to be in a position to exploit any growth opportunities as markets recover.

“We’ve had a much better last couple of months,” Linacre said in a telephone interview. “Don’t put the bunting out yet … but markets are showing at least some degree of poise and being able to absorb bad news.”

Shares in Panmure Gordon were 4.4 percent higher at 36.85 pence by 1134 GMT and at their highest level since September. The stock is still a long way short of levels above 180 pence in mid-2007, however.

Linacre said he wanted to strengthen a balance sheet seen as “thinner” than some of the firm’s rivals.

“I wanted to make sure that was never an impediment to us doing business,” he said. “These markets throw up extraordinary opportunities but you need to be relatively strong in order to take advantage of them.”

ABUNDANCE OF TALENT

Linacre said Panmure, which had failed merger talks with rival broker Ambrian Capital (AMBN.L) late last year, would not rush into spending the money but would look at areas where it could add incremental revenue streams and business lines.

“We have a great business but it could do with being a little broader, he said.

“We only do pure domestic equities … that’s a very narrow window in these markets so without radical change I think we can take the business forward quite a long way.”

The group cut 18 percent of its workforce in 2008 as part of cost reduction measures, but Linacre said they would be looking to hire over the coming year.

“With a more robust balance sheet, as we start looking to the future the aim is to make sure the business is in good shape for both this year and beyond,” said Linacre. “So clearly I would expect to be adding a few heads from here.”

BlueGem founder, and former managing director of Merrill Lynch Global Private Equity, Marco Capello also highlighted the potential for recruitment.

“The industry has very interesting prospects, as well as an abundance of available, talented professionals,” Capello said. “Panmure Gordon is extremely well positioned to take advantage of these opportunities.”

Earlier on Wednesday Panmure announced an adjusted loss before tax of 9.2 million for the year ended December 31, 2008, against a profit of 10.5 million in 2007. For the year-to-date it said revenues had been substantially ahead of 2008, however.

“I think the numbers were as the market expected them to be,” said Linacre. “Most people are just saying ‘look 2008 was dreadful for everybody, this is now all about looking forward’.”

($1=.6732 Pound)
By Kylie MacLellan
(Editing by Paul Hoskins and Simon Jessop)