ANALYSIS: Marex eyes deals to maintain IPO momentum
14th August, 2024|Luke Jeffs
Speaking on Marex’s first earnings call as a listed company, group chief executive Ian Lowitt said acquisitions are very much back on the table after the firm listed with Nasdaq on April 25 at $19 a share
Marex plans to continue the aggressive deals strategy that drove the British firm’s growth in the build-up to its high-profile New York listing in April.
Speaking on Marex’s first earnings call as a listed company, group chief executive Ian Lowitt said acquisitions are very much back on the table after the firm listed with Nasdaq on April 25 at $19 a share.
Lowitt, who has led the London-based financial group since January 2016, told the earnings call on Wednesday: “We have an active pipeline and there’s a couple of dimensions to that. We were obviously very engaged with the IPO so we have been able to shift some of those resources to focus on M&A. As a public company we are certainly seeing more inbound enquiries.”
Marex has been acquisitive for most of Lowitt’s tenure including the takeover of Rosenthal Collins Group (RCG) in 2019. But the pace of deals accelerated from 2020 with three transactions that year and two in 2021 before the landmark acquisition of ED&F Man Capital Markets in late 2022.
Lowitt said on Wednesday: “There’s a general sense that many of the companies we’re talking to have had a successful first half of the year so that impacts pricing. That is why we are at pains to emphasise we have very strict financial hurdles in place.”
The Marex chief cited “pricing and returns” discipline and his determination to protect the group’s reputation “as a savvy acquirer of businesses”.
The chief executive went on to describe how acquisitions are potentially a key component in the group’s international ambitions.
“We see a great opportunity to expand regionally with a focus on the Middle East, Asia Pacific and in particular Australia as well as the US,” said Lowitt.
In its presentation to analysts on Wednesday, Marex said its Europe, Middle East and Africa (EMEA) revenues increased 24% in the first half of this year to $445m (£346m), while earnings in the America rose 28% in the year to $281m in the first half.
Marex’s Asia business is smaller but growing faster however, with first half revenue up 41% on last year at $62m. On the call, Lowitt was bullish about the opportunity for the group in Australia and mentioned that the firm opened last month its first New Zealand office.
And the group’s second quarter earnings were strong with group revenue up 15% to $422.1m and profits after tax jumping 36% to $59.3m.
Lowitt said this strong performance reflected double digit growth in revenue and adjusted operating profit across all Marex business lines.
The chief executive added: “We saw an exceptional performance in the second quarter, where in addition to growing in all of our business segments, we were able to take advantage of the unusual opportunities presented in the metals market resulting from amended guidance from the LME regarding Russian metals.”
Lowitt said Marex has also been working hard to build its reputation in some of the markets where it is less well-known and cited an example where a client was looking to trade a large position but had been refused by its regular brokers.
Reflecting on this period, the chief executive added: “We were able to support our clients as a market-maker, providing access to liquidity in this active market. This demonstrates Marex's ability to perform well in a favourable environment, while continuing to operate within our strict risk parameters.”
The chief executive added: “The outlook for Marex remains positive and we believe we are on track for a tenth year of sequential growth. We anticipate full year adjusted operating profit to be approximately $280m to $290m, assuming more normalised market conditions in H2 2024, following the strong performance in the first half, momentum in our businesses and further progress executing our growth strategy."
The quarterly results were well-received by the market also with Marex shares up over 3% on Wednesday to $24, an all-time high for the stock.
Marex appointed in January former JP Morgan clearing expert Stuart Kidd as its new interest rate swap client clearing product manager based in London.
