Diamond has bought the stockbroker through his New York private equity firm Atlas Merchant Capital, in conjunction with QInvest, the Qatari investment bank, which already owns a 43% stake in Panmure.
Atlas will control a majority stake, with QInvest maintaining its existing stake.
Shareholders will receive 100p in cash for each share, representing a 68.1% premium to Panmure’s closing price of 59.5p on Wednesday.
While Diamond did not comment on the deal, the head of Atlas in the UK and Europe, Matthew Hanson, said the acquisition would take Panmure private and “out of the glare of the public market and the effects of share price movement”.
Diamond resigned as chief executive at Barclays following the scandal over the bank’s manipulation of Libor interest rates in 2012. Barclays was fined £59.5mln by the Financial Services Authority for rigging Libor and Euribor rates.
At the time, then-Chancellor George Osborne said Diamond’s decision to step down was the right decision for the bank and the country. Lord Mandelson also once branded Diamond as the “unacceptable face of banking”.
Moving on from Barclays and on to Panmure, it is understood Diamond will play no active role in the stockbroker’s activities. Since he will not be in a regulated position, he will not have to seek approval from the City regulator.
Diamond has chosen one of Britain’s oldest and most vulnerable stockbrokers in returning to the City’s spotlight. Panmure, whose name dates back 140 years, has seen its share price plunge more than 60% over the past five years and has lost 95% in value since the 2008 financial crisis.
The company reported a 2015 loss of £16.7mln, reflecting macro-economic headwinds, including worries over Brexit, and a goodwill impairment of £13.2mln.
In a January trading statement, Panmure said it expects to return to full year profit and positive operational cash flow on the back of an increase in revenue to about £27mln from £23mln the prior year. It said trading for the year to 31 December 2016 has been in line with its expectations, with revenues weighted towards the second half.
On today’s deal, Panmure chairman, Andrew Adcock, said he believed the deal was fair given its past struggles.
“Against the backdrop of a challenging macro-economic environment, with the resultant market volatility which has in recent years impacted Panmure Gordon’s business, the independent Panmure Gordon directors believe that the scheme price reflects a fair and reasonable offer,” he said.
Diamond’s decision to dip his toe back into London waters, begs the question of whether he has plans to dive deeper with future City investments.
Given the prospect of rising US interest rates, Hargreaves Lansdown‘s senior analyst, Laith Khalaf, expects to see more companies taking advantage of cheap capital before the year is up, which could drive merger and acquisition (M&A) activity.
The Federal Reserve on Wednesday raised benchmark interest rates by 25 basis points and said repeated its estimate for two more hikes this year and three more in 2018.
“I think what we are seeing is rising interest rates pushing merger and acquisition activity as we are coming to the end of the year because companies see it as the last chance to get access to cheap capital,” Khalaf told Proactive Investors.
Shares in Panmure rocketed 64.87% to 98.10p in morning trading.
Story by ProactiveInvestors