LONDON Former Barclays (BARC.L) chief executive Bob Diamond marked a return to investment banking in Britain on Friday with a Qatari-backed takeover of stockbroker Panmure Gordon (PMR.L), one of the oldest names in the City of London.
Diamond, who left Barclays in 2012 during the Libor interest rate-rigging scandal, is making the move through his private equity firm Atlas Merchant Capital, alongside QInvest which together have reached a deal which would value Panmure at around 15.5 million pounds.
Panmure's shares rose by 68 percent on Friday following news of the takeover deal, which has been recommended by its board of directors, a move equal to the bid premium over the stock's closing price on Thursday.
Diamond had in the years before his exit built up Barclays' investment bank into one of the world's leading players, with a more aggressive Wall Street culture creating tensions within the more traditional British bank.
While Diamond's contacts and investment banking experience will be used to help drive Panmure forward, he will not be involved in the day-to-day running of the firm, a source close to the 65-year-old banker said.
Qinvest already owns 43 percent of Panmure, as it is referred to in the City, which is a 141-year-old stockbroker and investment bank focused on small and mid-sized UK companies.
Panmure built a reputation for financing deals for a host of overseas governments, ranging from a gold-backed loan for the Chinese imperial government in 1885 to helping Japan to raise funds to rebuild damaged cities in the 1950s.
British Prime Minister David Cameron's late father, Ian, who spent much of his career at the firm, was a senior partner at Panmure, which has fallen on hard times in recent years. Its share price has declined by 93 percent in the last 10 years amid rising competition and narrowing commissions for stockbrokers.
It posted a loss of 4.1 million pounds in 2015, although it said in a trading update on Jan. 9 that it expected to report a profit for 2016.
"There is significant opportunity for Atlas, in partnership with QInvest, to ... build a larger, successful boutique investment bank," Matthew Hansen, the head of UK and Europe for Atlas, said, adding that the "long term stabilisation and development" of Panmure was only achievable as a private firm.
Diamond co-founded New York-based Atlas Merchant Capital in 2013 to invest in financial services companies.
He had, through a consortium including the similarly-named investment vehicle Atlas Mara (ATMA.L), sought to buy the African unit of his former employer Barclays, but the deal stalled last year following the withdrawal of Carlyle Group.
($1 = 0.8089 pounds)
(Additional reporting by Andrew MacAskill; Editing by Rachel Armstrong and Alexander Smith)