Cavendish warns Iran conflict could damage long-term growth
Heightened geopolitical tensions, including the Iran war, could damage investor confidence and suffocate long-term growth if they persist, UK investment bank Cavendish has warned.
The AIM-listed group noted that while certain “macroeconomic conditions had been trending more positively”, including gradually declining interest rates and rising capital allocation into European markets, investor sentiment continued to be skewed by wider issues.
Cavendish claimed attitudes are “heavily influenced” by the ongoing conflict in the Middle East alongside the prolonged Russia-Ukraine war, political uncertainty in the UK and continued debates surrounding returns on AI investment.
The bank said: “The longer these issues and in particular the Middle East conflict persist, the more likely they are to impact negatively on outlook.”
In a bid to counteract potential headwinds, the bank confirmed it was eyeing tight cost control and growth in mid-market private M&A to boost revenue.
Shares rose 2.4 per cent in early morning trading to 8.9 pence, but are down 12.5 per cent since the start of the year.
Broadly unchanged
Cavendish reported broadly unchanged revenue in the 2025 financial year with the group expecting it to reach £56m, up from £55.6m the prior year.
In public markets, full-year revenues were “modestly ahead” of the previous year, buoyed by the IPO of accounting and advisory firm MHA in April 2025, which raised £98m, despite the wider IPO drought in the London market.
The group also reported an increased contribution from equity trading and investment companies and added 27 new clients over the course of the year.
Average fees also remain broadly consistent.
Private market drop
Private markets saw a reduction in revenue, as the level of deal volumes remained in line with the previous year while the average deal size shrunk, constraining further growth.
The company’s new offices in Birmingham and Manchester performed in line with business expectation during their first full year in operation, boosting the organisation’s local capabilities.
The group added that it is entering the next financial year with stronger equity distribution capabilities which is expected to generate further commission and capture higher-value deal flow, but acknowledged the Middle Eastern conflict could strangle growth.