Adverse budget risks doom IPO revival, Cavendish chief warns

Monday 13 October 2025 12:55

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The boss of a London-listed investment bank has warned Rachel Reeves must be “careful” that her budget policy does not damage the recovering IPO market.

Talk to AM City at the Global City & Financial Capital Markets Summit, Julian Morse, chief executive of Cavendish, said: “Main driver [of the IPO market] is the economy, so if the government takes policies that are detrimental to the economy, it will harm the IPO market.”

“They have to be very careful,” he added.

Morse urged the government to be “business friendly” in their tax changes, pointing to employment and employer levies, which he said “need not be implemented or completely rolled back to create growth”.

Reeves’ changes to corporate national insurance contributions last year dealt a blow to business confidence across the country and economists said the increases would hamper growth.

The Chancellor lowered the threshold at which employers start paying tax to £9,100 from £5,000 and raised the rate by 1.2 per cent.

However, one way the Chancellor can get support from the City Government is to eliminate stamp duty on trading shares of companies newly listed on the stock exchange, which is at the level of 0.5 percent.

Morse said the move “should be good for liquidity and ultimately good for valuations,” but added that, while “useful,” it is not “the main thing.”

AIM to take a piece of the list recovery

With the final quarter of 2025 showing the pace of the City’s IPO revival accelerating, Morse anticipates further offerings will occur in the next year.

“I think it will expand, we will see adequate volumes post Christmas because there will be a bit of inertia in the budget so late and people are also waiting.

“I think rather than everyone trying to do something before the end of the year, and with IPOs in general, they’re going to plan it in a measured way.”

The investment banker added: “2026 will be a very good year for IPOs.”

In June, Cavendish said it had maintained its position as “a leading broker and advisor to AIM quoted companies” and won 21 new quote clients while completing 70 transactions.

The company also said it accounted for more than 60 percent of the capital raised in the previous six months as it held a “major share in UK IPO activity”.

Morse said “now, it’s commonplace again to talk about IPOs” and AIM will benefit from this buzzing energy.

“We’re in the process right now, doing some IPOs… there’s the right momentum that we’re seeing in the AIM market as well.”

The new injection will come at a much-needed time for London’s junior share market, with a report from asset manager Aberdeen in May suggesting the small-cap AIM index would shrink by a fifth.

The combination of mergers, private equity takeovers and delistings in favor of private securities venues and promotions to primary markets is expected to result in the exchange losing £12.3 billion in market capitalization.

The dire state of the index had led journalists earlier this year to a group of City suitors having put together an ambitious deal to buy AIM.

But junior stock market boss Marcus Stuttard is telling AM City in June: “AIM is not for sale,” despite the index’s rebranding efforts emphasizing “enthusiasm and opportunity.”