The £102m flotation of the stockbroker Cenkos Securities on Tuesday will see New Smith Capital, the investment vehicle of Merrill Lynch old boys Michael Marks, Paul Roy and Stephen Zimmerman, scoop nine times their original investment.
New Smith ploughed in seed capital of £1.67m in return for 33 per cent of Cenkos, founded in April 2005 by Andy Stewart. In April this year, a dividend equal to that amount was paid to New Smith, which will now receive £15m for its stake.
Mr Stewart, a turf fanatic with a fortune of about £200m, will see his stake in Cenkos, named after his most successful racehorse, diluted from a third to 23.8 per cent after the float. Some 16 per cent of the shares have been placed with 16 institutional investors and clients of Cenkos's Guernsey wealth management arm by HSBC at 140.5p each.
"The float will give New Smith more than a cup of tea," Mr Stewart said. "We are looking at things [to buy], but we will not use this to go out and acquire things willy nilly for megalomania."
Meanwhile, the stockbroker that Mr Stewart founded in 1991 - Collins Stewart, now Collins Stewart Tullett - unveiled two acquisitions ahead of its demerger later this year. The group is buying the corporate advisory boutique Hawkpoint for £40m cash and £110m-worth of shares, and the New York brokerage Chapdelaine Corporate Securities, for $95m (£50.3m) cash.
Hawkpoint will be folded into the demerged Collins Stewart stockbroking business in a deal that will make David Reid Scott, Hawkpoint's chairman and a 10 per cent shareholder, about £15m richer. Other Hawkpoint shareholders who stand to benefit significantly from the deal include Paul Baines, the chief executive and 7 per cent shareholder. Mezzanine Capital, a fund manager, owns 14 per cent.
Collins Stewart and Hawkpoint will be run as separate busines-ses, with the services of each offered to clients of the other. Collins Stewart Tullett's other arm, its Tullett Prebon inter-dealer brokerage, is to be bolstered with the Chapdelaine acquisition.
Terry Smith, the chief executive of Collins Stewart, said: "We're buying Hawkpoint because it will create a unique business in London. We think Collins Stewart is the strongest mid-market broker. Hawkpoint is the strongest adviser. Tullett Prebon was doing very well, but one area of weakness was in fixed income. Chapdelaine fills that gap for us."
Collins Stewart Tullett shares edged 4.5p lower to 860p. Shares in another brokerage and advisory business, Evolution Group, fell 4.5p to 127.5p after it warned that annual profits would fall well shy of City targets. Evolution blamed an expected shortfall of about £8m on a slowdown in the company listing market and £10m of costs related to the integration of Williams de Broë, the brokerage it bought in June.Reuse content