Cavendish plc sees surge in private deals and predicts UK market comeback as US risks rise

Cavendish plc, a prominent UK-based investment bank, has released its full-year trading update for the financial year ended 31 March 2025, highlighting consistent profitability, strategic private market expansion, and growing optimism around a shift in investor sentiment toward UK equities. The firm reported stable revenues and rising market share in both public and private markets, even amid broader volatility in global equity markets. With its balance sheet bolstered by £21 million in net cash, Cavendish enters the new financial year with strong momentum, a larger mandate pipeline, and positioning that could allow it to benefit from an anticipated rebalancing of global capital flows.

Cavendish plc trades on the London Stock Exchange under the ticker CAV. As of April 4, 2025, the stock closed at 8.25 pence, down 4.62% from the previous day’s close. Over the past 12 months, shares have declined by around 25.83%, reflecting broader investor caution across UK small-cap financials. The stock currently trades near the lower end of its 52-week range of 8.00 to 15.00 pence, suggesting potential undervaluation in the context of its strong fundamentals and balance sheet resilience.

How did Cavendish perform financially in FY25?

For FY25, Cavendish is expecting group revenues of approximately £55 million, matching its performance from FY24 on a like-for-like basis. Despite a turbulent capital markets environment, the company remained profitable in both halves of the financial year, reflecting operational resilience and sustained demand across its service lines. The bank’s net cash position of £21 million at the fiscal year-end underscores its disciplined cost management and prudent approach to capital deployment.

This healthy liquidity gives the firm a solid foundation to reinvest in talent, technology, and regional expansion. It also acts as a cushion against market uncertainties, enabling Cavendish to sustain its service quality and execute on growth opportunities without depending on external financing. The Board has emphasized that maintaining this cash-rich balance sheet is critical to ensuring financial flexibility in a still-uncertain macroeconomic environment.

What’s driving Cavendish’s momentum in public markets?

Even as IPO volumes in London have struggled to regain pre-2022 momentum, Cavendish has managed to grow its market share in the public equity domain. The company completed both the final initial public offering (IPO) of 2024 and the first IPO of 2025, signalling its continued relevance in the capital-raising ecosystem. These transactions come at a time when the London Stock Exchange has faced significant headwinds, including increased competition from US and European exchanges and a perceived lack of domestic retail investor engagement.

Cavendish continues to rank first by the number of growth companies it supports on the Alternative Investment Market (AIM), reflecting its longstanding dominance in advising small-cap and mid-cap firms. The firm is also expanding its client base on the Main Market, reinforcing its reputation as a trusted partner for companies at various stages of capital markets maturity.

The appointment of Cavendish’s Chair to the UK’s Capital Markets Industry Taskforce (CMIT) highlights the bank’s active role in shaping policy debates aimed at rejuvenating London’s status as a global listings hub. This participation may position the firm to help influence regulatory reforms that could create a more favourable IPO and equity funding environment in the UK.

Why is Cavendish seeing rapid expansion in private markets?

Cavendish’s private markets business delivered robust revenue growth in FY25, benefitting from strong advisory capabilities and sustained demand for M&A and strategic advice among private firms. The company’s regional expansion through new offices in Manchester and Birmingham, supported by experienced advisory teams, has further cemented its presence outside London, allowing it to better serve a broader spectrum of clients.

The strength of the firm’s private markets platform is underscored by its growing pipeline of active mandates, which exceeds the previous year’s levels. This pipeline growth comes as more entrepreneurs look to monetise their businesses and as private equity (PE) funds step up their deployment of capital. The firm maintains relationships with around 150 UK private equity houses, many of which are flush with fresh capital. Over the past 18 months, 20 of these PE firms have collectively raised £7 billion, with much of this funding targeted at sectors where Cavendish maintains deep sector expertise.

This capital overhang in private equity has supported transaction volumes even as public market activity has waned, and Cavendish’s full-spectrum capabilities in advising private businesses on sale, capital raising, and growth strategy have made it a go-to adviser in the segment.

How is Cavendish viewed by investors and the market?

Despite the operational strength reported in FY25, Cavendish’s share price remains under pressure. At 8.25 pence, the company’s valuation suggests a price-to-book (P/B) ratio of approximately 0.72—meaning the market is pricing the company at a discount to its book value. For value investors, this may represent an opportunity, particularly given the company’s solid fundamentals and its cash-rich balance sheet.

However, investors should note that earnings per share (EPS) remains negative at -0.007, and the company currently has no applicable price-to-earnings (P/E) ratio. This may reflect lagging profitability metrics following its merger history or restructuring phases. On a more positive note, Cavendish currently offers a dividend yield of around 6.36%, making it attractive to income-focused investors seeking yield in a low-growth environment.

Adding further complexity to sentiment analysis, a notable insider transaction was disclosed on January 31, 2025, involving CEO Julian Morse, who executed a simultaneous purchase and sale of nearly 2.9 million shares at £0.09 per share. While the context of this transaction has not been publicly clarified, such insider activity may suggest either liquidity rebalancing or strategic positioning, and is worth monitoring by prospective shareholders.

From an investment perspective, Cavendish may warrant a Hold recommendation. The stock’s current valuation levels appear to underestimate the company’s strategic growth momentum and private market opportunities. However, risks around continued low trading volumes, UK equity market uncertainty, and earnings performance suggest caution. Investors may consider accumulating shares on weakness if macroeconomic trends favour a UK small-cap rebound, while others may wait for a more decisive earnings recovery before entering or adding to positions.

How is global macroeconomic uncertainty affecting capital flows?

Cavendish’s outlook is shaped not only by UK-centric dynamics but also by shifting global macroeconomic risks—particularly in the United States. The firm notes that President Donald Trump’s renewed tariff agenda and government spending cuts are elevating recessionary risks in the US economy. These policy moves, combined with historically high valuations in US equity markets and concentrated capital exposure to a few large-cap tech firms, are driving increased interest in portfolio diversification.

Investors, especially institutional asset allocators, are beginning to reassess their exposure to US markets. This shift is creating early signs of capital rotation towards European and UK equities, driven by a search for value, reduced risk, and geographic balance. While the rotation currently favours larger, more liquid European stocks, past market cycles suggest that over time, inflows will filter down to small and mid-cap segments—an area where Cavendish has deep domain knowledge and a strong client roster.

Historically, UK small and mid-cap stocks have outperformed in the recovery phase following market downturns due to their leaner cost structures, innovation-led business models, and compelling valuations. With the FTSE SmallCap and FTSE AIM indices trading at valuation discounts relative to historical averages and to global peers, these segments appear ripe for renewed investor attention.

What lies ahead for Cavendish and its clients?

Cavendish enters FY26 with a favourable setup: a stronger pipeline, rising private market activity, and a potential revival in interest in UK equities. The company’s ability to offer comprehensive solutions across M&A advisory, equity capital markets, and strategic counsel makes it uniquely equipped to serve both entrepreneurs and institutional clients looking to navigate an evolving financial landscape.

Importantly, the firm’s model of supporting businesses throughout their lifecycle—from early-stage funding through to IPO or trade sale—enables it to build long-term client relationships. This approach is particularly valuable in volatile markets, where continuity, trust, and contextual understanding are critical to achieving successful outcomes.

In the longer term, if macroeconomic headwinds abate and capital market reforms progress as hoped, the UK could witness a sustained rebound in domestic listings and cross-border deal activity. Cavendish, as one of the few UK investment banks with scale, regional presence, and diversified capabilities, is positioned to capture the upside of this recovery.

By aligning itself with structural growth trends in private capital, engaging in public market reform efforts, and maintaining financial discipline, Cavendish is setting a clear course to reinforce its leadership in the small and mid-cap advisory space. Investors, entrepreneurs, and institutional allocators will be closely watching how the firm capitalises on this convergence of opportunity in FY26 and beyond.