City broker FinnCap takes profit hit as founder Sam Smith bows out

FinnCap warned ‘weak and volatile’ equity markets led to a challenging start to its new year – just as its founder Sam Smith ends her tenure as one of the few women to run a City broker.

Smith, who founded FinnCap 24 years ago and was the most high-profile female stockbroker in the Square Mile, said last month she had decided to leave after clocking up some ‘unbelievable hours’ in recent months – adding that she now wanted some time to herself and even to go on a date.

But her departure comes at an uncertain time for the company. FinnCap reported that the start of its financial year had faced ‘very low’ deal volumes and, as a result, its financial performance was expected to be ‘substantially lower’ than the previous year.

Departure: Finncap founder Sam Smith, the City’s most high-profile stockbroker, is leaving

The group blamed the uncertainty on the war in Ukraine as well as ‘broader concerns over inflation and economic growth’, which meant activity in equity markets had declined and made the firm’s pipeline ‘much quieter’ than previously. 

The bleak outlook was accompanied by a lukewarm set of results which saw FinnCap post a profit of £9.3million for the year to the end of March, down from £9.6million the year before despite a 13 per cent rise in revenues to a record £52.5million.

FinnCap’s rivals have also suffered amid the slowdown in deal-making activity.

Earlier this month, fellow City broker Peel Hunt warned ‘continuing low levels’ of market activity had hit its revenues.

FinnCap shares dropped 7 per cent, or 1.25p, to 16.5p yesterday following the results.

Despite the unfavourable market conditions, Smith said in her final comments on results as chief executive that the business was ‘well placed to resume growth once market conditions permit.’ 

She will hand over the reins in September to managing partner John Farrugia but will remain as an adviser. 

Announcing her departure last month, Smith, who has an eight-year-old daughter, said she was ‘really excited to have a break.’

She added she ‘might actually have a proper holiday’ where she didn’t have to work ‘every single day’. She led the way for women to enter the world of stockbroking, traditionally a place for white middle-aged men.

She headed the management buy-out of FinnCap from JM Finn in 2007 at just 33, two weeks after Northern Rock collapsed. 

She built the business into a renowned mid-cap broker and led its listing on the London Stock Market in 2018.

Smith is also known for backing women in the industry, with around 38 per cent of FinnCap’s 149 employees being female, an impressive ratio compared to many other City firms.

Despite her departure, Smith will remain the company’s third-biggest shareholder with a nearly 10 per cent stake, which she intends to hold on to as a long-term investor. 

But her stake has performed poorly in the run-up to her departure as chief executive. 

After hitting an all-time high of 46p in April last year during a pandemic-inspired boom in trading, shares have declined by nearly 64 per cent as worries about the global economy put the brakes on deal-making and demand for its broking services.

This post first appeared on Dailymail.co.uk