If you want to know how it feels to feel wanted in finance, you could always ask Liberum. The diminutive pan-European brokerage firm is reportedly being wooed by Macquarie. However, it is not so long ago (last week) that Liberum was also reportedly being sniffed by Bob Diamond's Panmure Gordon. It's clearly got something.
Named after the Latin world for independence, Liberum was founded in 2007 by chief executive Shane Le Prevost. It's had its ups and downs - in 2015, then chief executive Simon Stillwell left as the firm struggled with a high cost base and falling profits. Headhunters at the time told us Liberum was known for treating a small coterie of senior people very well indeed and for being less generous to the rest.
In 2018 some things have changed. Liberum made a profit of nearly £5m last year according to its accounts for 2017, up from £1.4m in 2016. Accordingly, the highest paid individual at the firm (likely Le Provost) took home £956k, up from £655k the year before. However, the average of Liberum's 178 employees took home £171k, down from £175k in 2016.
Irrespective of staff pay, rivals clearly think Liberum has something. Observers suggest it's the whiff of scale. By plugging Liberum's 122 front office staff into their own equities businesses, the likes of Macquarie or Panmure Gordon can grow overnight and hopefully vanquish MiFID II. The UK Liberum franchise is deemed "strong" by headhunters, although the smaller U.S. franchise raises a few eyebrows.
Not everyone is convinced, though. One equity research headhunter points out that Macquarie and Liberum suffer the same problem - both are smaller players with mostly unranked staff. "Macquarie would have been better off buying a best in class broker like a Numis," says one. In this year's Extel rankings, Liberum ranked third among small and mid cap brokers in the UK, behind Numis and Peel Hunt.
For Liberum's employees, Macquarie may yet provide some shelter from the MiFID mayhem. Even big rivals like Numis have been cutting costs, and Berenberg has decided its recent expansion was all a terrible mistake. Macquarie, meanwhile, has been hiring heavily in equities sales and trading this year under Daniel Kaye, the former Credit Suisse trader who's been building the equities business since early 2017, and will undoubtedly welcome the mass injection of new staff.
However, some observers suggest the recent departure of Peter Crampton from Macquarie's oil and gas equity research team augurs badly for Liberum researchers. Crampton joined Macquarie in 2014 with a mandate to build the European utilities franchise at the Australian bank. Utilities have traditionally been Macquarie's strongest area and Crampton therefore had one of Macquarie's most prestigious jobs - but left (seemingly for Barclays) nonetheless.
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