Cavendish warns of 'short-term uncertainty' as City braces for Budget tax hikes

Cavendish, one of the emerging players in the City's investment banking sector, has flagged "short-term uncertainty" ahead of the Autumn Budget, with financial circles bracing for expected tax increases.

Formed from a £43m merger between Cenkos and Finncap last year, Cavendish has called on Chancellor Rachel Reeves to create "more incentive for investment in small and medium-sized UK companies, not less" come 30 October, as reported by City AM.

In its dealings with clients, the firm noted it has been proactive "to plan for any adjustments which could be needed".

With Labour having secured victory in the recent general election, investors are apprehensive about potential swings in policy direction in the imminent first Budget. It is widely anticipated that there will be tax hikes as the government aims to fill a supposed £22bn void in public finances.

"Despite this short-term uncertainty, we remain focused on our core objective which is to build on the strong foundations we have already established to develop Cavendish into the leading full-service investment bank for growth companies," remarked Cavendish amidst these unfolding events.

In a latest trading update, Cavendish stated it had a fruitful six-month period ending September 2024 with an uptick in transactional activity, although it refrained from disclosing profit figures.

The company had previously reported an operating loss of £3.9m for the financial year concluding 30 March 2024, marking a downturn from a previous £1.9m loss.

On Monday, the company stated: "Our profitable first half, in both public and private markets, demonstrates the broad appeal of our service offering and the efficiency of our platform".

The firm reported that it anticipated group revenue for the six months to be at least £27.5m, representing a 41% increase from £19.5m on a like-for-like basis compared to the previous year.

As of 30 September, Cavendish's cash balances had increased by 40% year on year to £17.2m, providing the group with "financial resilience for the group".

The company also announced: "We have a solid pipeline of both public and private transactions in train, including a number of potential IPOs and ongoing public M&A activity."

It added: "We have increased our share in the public markets in terms of the number of AIM clients (rank first) and by adding clients on the Official List to meet our ambition of increasing the average market capitalisation of our client base."