A harmful budget risks shattering IPO revival, Cavendish chief warns
The boss of a London-listed investment bank has warned Rachel Reeves must be “careful” her budget policies do not damage the recuperating IPO market.
Speaking to CityAM at City & Financial Global’s Capital Markets Summit, Julian Morse, chief executive of Cavendish, said: “The main driver [of the IPO market] is the economy, so if the government brings in policies which harm the economy, that is going to harm the IPO market.”
“They need to be very careful,” he added.
Morse urged the government to be “business friendly” in their changes to tax, pointing to employment and employer levies, which he said “they need to either not touch or actually rescind some to create growth”.
Reeves’ changes to employer’s national insurance contributions last year delivered a hammer blow to business confidence across the country and economists pointed to the hike as denting growth.
The Chancellor lowered the threshold at which employers start paying the tax to £9,100 from £5,000 and hiked the rate 1.2 per cent.
But one welcome lever the Chancellor could pull to garner affection from the City is scrapping stamp duty on trading shares of newly-listed companies, which sits at 0.5 per cent.
Morse said the move “should be good for liquidity and ultimately good for valuations,” but added, whilst “useful,” it was not “the major thing”.
AIM to grab a slice of listing recovery
With the final quarter of 2025 indicating the pace was picking up for the City’s IPO revival, Morse anticipated further floats were to come in the next year.
“I think it’s gonna spill over, we’ll see proper volumes post-Christmas because there is going to be a little bit of inertia around the budget so late and people waiting as well.
“I think rather than everyone trying to cram something in before the year end, and with IPOs in general, they’ll plan them in a measured way.”
The investment banker added: “2026 would be a very good year for IPOs.”
In June, Cavendish said it had maintained its position as the “leading broker and adviser to AIM-quoted companies” and won 21 new quotes clients whilst completing 70 transactions
The firm also said it accounted for more than 60 per cent of capital raised in the six months prior as it held a “commanding share of UK IPO activity”.
Morse said “now, it has become mainstream again to talk about an IPO” and AIM was set to benefit from this rumbling energy.
“We’re on the road at the moment, cornerstoning a couple of IPOs… there is some proper momentum that we’re seeing at the sort of AIM end of the market as well.”
The fresh injection of life would come at a much-needed time for London’s junior stock market, with a report from asset manager Aberdeen in May suggesting the small-cap AIM index was set to shrink by a fifth.
A combination of mergers, private equity takeovers and delistings in favour of private securities venues and promotions to the main market are expected to result in the exchange shedding £12.3bn in market capitalisation.
The ailing state of the index had led to reporters earlier this year a group of City suitors had strummed up an ambitious deal to purchase AIM.
But the boss of the junior stock market, Marcus Stuttard, told CityAM in June: “AIM is not for sale,” though did say the attempted rebrand of the index emphasised the “enthusiasm and opportunity”.