London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

'Bombed-out valuations' still a worry for the City despite 'encouraging' Deutsche Bank takeover of Numis Securities

'Bombed-out valuations' still a worry for the City despite 'encouraging' Deutsche Bank takeover of Numis Securities

Germany's largest lender is incredibly warm about the UK's capital markets in its statement on the £410m deal, but it is also getting a bargain, which some sceptics may view as a distress sale.

For some time now, the City has been doing some soul-searching over its future.

There was a lot of speculation around the time of Brexit that, deprived of the "passport" that enabled UK-based firms to do business in the EU without having permission from each individual country regulator, there would be heavy job losses in the Square Mile and Canary Wharf as jobs haemorrhaged away to Frankfurt, Paris, Luxembourg, Dublin and Amsterdam.

That has failed to happen - and, in fact, some 45,000 more people are employed in the City and the Wharf than before the coronavirus pandemic.

More recently, though, there has been a lot of discussion about the attractiveness of the UK stock market.

The FTSE 100 has for some time been more cheaply rated than some of its global peers, not only the main US index, the S&P 500, but also some continental European peers such as the DAX 40 and CAC 40.

That has been accompanied by a trickle of bad news on individual listings.

The chip designer Arm Holdings, a flagship of the UK tech sector, resisted UK government entreaties to pursue a secondary stock market listing in London as it opted to list on the Nasdaq instead.

Arm snubbed London despite high level lobbying


Then CRH, the owner of Tarmac and the world's biggest building materials company, announced it was moving its main listing from London to New York and Flutter Entertainment, the owner of gaming businesses including Paddy Power and Betfair, indicated it would be doing the same.

Some of the commentary around all of these has created an impression that the lights were going out in offices across the Wharf and the Square Mile.

So news that Deutsche Bank is buying the broking and corporate advisory firm Numis Securities for £410m will have come as a surprise to many.

Not least because the statement from Germany's largest lender is so incredibly warm about the UK's capital markets.

Deutsche said that Numis, which employs 344 people, would enable it to engage more deeply with corporate clients in the UK.

It added: "The UK is the largest investment banking market in Europe and Deutsche Bank has been evaluating how to accelerate the growth of its business in the UK.

"Numis is a diversified investment bank with a leading UK franchise and a long history of successfully delivering superior client service and growth and therefore represents a compelling strategic fit."

It is a statement that reads like a huge vote of confidence not only in Numis, its management and its employees, but also in the broader UK financial services sector and the City in particular.

That can particularly be argued in view of Deutsche's stated aim of becoming a so-called "house bank" - one which is focused on serving German businesses overseas or overseas businesses trading in Germany.

Thousands more work in the City than before the COVID-19 pandemic


Encouraging turn of events


Deutsche appears to be preparing for either an uptick in British investment in its homeland or of further German investment in the UK.

It is an encouraging turn of events.

Let's also be clear, though, that Deutsche is getting a bargain.

The 350p-a-share take-out price may well represent a 72% premium to the closing price on Thursday evening and a 60% premium to the average price at which Numis shares have traded over the last three months, but it is still only pitched at where shares of Numis were changing hands just 15 months ago.

What has happened since then, of course, is that Vladimir Putin invaded Ukraine and the global economy has been rocked by surging inflation as a consequence.

The way central banks around the world have been forced to respond by rapidly raising interest rates has led growth to slow everywhere and has slowed the volume of stock market flotations and mergers and acquisitions on which companies like Numis rely to generate fees.

That was particularly the case in the UK due to the extra layer of uncertainty created by the mini-budget in September last year.

Numis saw its revenues fall by one-third last year - so some sceptics may well view this as a distress sale.

Numis, founded in 1989 by the entrepreneur Oliver Hemsley, is far from being alone in this respect.

This deal comes barely a month after two smaller broking and advisory firms, FinnCap and Cenkos Securities, announced they were tying the knot.

Latest reflection of 'bombed-out valuations'


It is possible that there will be more consolidation after today and, to that end, it is worth noting that shares of Peel Hunt, a rival to Numis in particular, shot up 10% on the news.

And bear in mind also that a number of UK mid-cap companies - ironically the sort of businesses Numis and Peel Hunt advise - have recently agreed to takeovers or have been approached by would-be buyers.

They include John Wood Group, Dechra Pharmaceuticals, Dignity, Network International and Hyve Group and the interest stems partly because these companies are comparatively cheap.

So, while this takeover does feel like a vote of confidence in the City, it is also the latest reflection of the bombed-out valuations on which some UK-listed stocks have been trading.

Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×