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Shore Capital look to cash in on credit crunch

Howard Shore, founder and chairman of Shore Capital Group

The principals of the Bermuda Stock Exchange-listed Shore Capital Group Limited believe the collapse of Silicon Valley Bank and the associated fallout will likely turn the cycle of credit tightening to something more akin to a credit crunch in certain sectors.

And chairman Howard Shore concluded that it should open up new opportunities for his company’s capital markets, asset management and principal finance businesses.

He said: “We therefore remain confident about our future prospects.”

Mr Shore was commenting as the company presented its results for the year ended 31 December 2022.

The financial highlights included revenue of £61.5m (2021: £73.5m) and a pre-tax profit of £5.7m (2021: £19.1m).

The capital markets business of the company was impacted by the material weakening of investor sentiment during the year, but has nonetheless acted on a number of significant capital raisings and M&A transactions, including one of the few IPOs in 2022, as well as securing several high-quality corporate clients.

But the chairman said: “Notwithstanding the drop in revenue in our Capital Markets business as a result of market conditions, for the first time in the group’s history, Asset Management revenues have exceeded Capital Markets revenues, demonstrating the benefits of our diversified business model.”

There were reduced revenues from the capital markets division of £30.1 million in the period, delivering pre-tax profits of £0.7million.

Mr Shore explained: “These figures represent a reduction from what was a very strong performance in 2021, reflecting the macroeconomic headwinds and geopolitical instability that impacted global equity markets throughout the period.

“Investor sentiment has been significantly weakened by a combination of Russia’s invasion of Ukraine, a growing cost-of-living crisis and a rising interest rate environment, which together contributed to a material reduction in liquidity and activity generally.

“Despite these headwinds, our corporate advisory and broking business has remained active and saw a particularly busy second half of the year compared to market peers, raising c.£300 million in the secondary market for nine of our listed clients.

“Across the full year, we acted on M&A deals worth over £1 billion in total, completed one of the few IPOs in the year and raised over £460 million new capital for our clients and realising value for existing management.

“During the period we added 15 new clients, including FTSE 350 constituents J Sainsbury plc, Hilton Food Group plc and SSP Group plc.”

The Asset Management division increased revenues by 40 per cent to £30.5 million, nearly doubling pre-tax profits to £6.7 million.

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Published March 17, 2023 at 7:30 am (Updated March 16, 2023 at 8:29 pm)

Shore Capital look to cash in on credit crunch

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