Legal Business Blogs

Spin-offs likely as Mishcon ‘considering all options’ for a capital raise

Mishcon de Reya is considering options for raising capital in a bid to fund its ‘ambitious plans’ for growth, including a possible initial public offering (IPO).

Sky News reported on Saturday (20 July) the firm is looking to either list on the stock exchange or sell a stake to a private equity investor to raise capital.

In a written statement, a spokesperson said: ‘Mishcon de Reya has delivered significant growth over the past 15 years. As a financially robust and dynamic firm we have ambitious plans for the next phase of growth and to achieve this are considering all options for raising capital. No decisions have yet been made.’

The firm has long been rumoured to be looking at options for external capital. It last year reported an 8% increase in revenue to £161.3m  – a relative slowdown for a firm which has grown 82% since 2013 – while profit per equity partner (PEP) dipped 9% to £1m in the last financial year.

That strong five-year growth track would make the firm a strong IPO candidate on the face of it, while the firm is also much more profitable than DWF, the most recent firm to float. Based on its most recent PEP, equity partner headcount and other law firm floats, any flotation could value the firm in the low hundreds of millions of pounds.

One financial adviser, however, believed a more likely scenario would see the firm, which has an alternative business structure licence, spin-off a separate business to raise external funding, rather than floating the main partnership. They suggested Mishcon may potentially want to invest in a litigation fund or a business focusing on its key strengths in private wealth.

‘It’s more difficult to see how the partnership, given it’s a major disputes firm, would position itself as a public company as litigation can lead to lumpier profits,’ they commented. ‘It’s much more likely it is looking to raise some capital, as opposed to an IPO of the whole thing. But [managing partner] Kevin Gold is a very entrepreneurial leader.’

Mishcon has been expanding its non-legal offering, which includes a cyber security consultancy and a private family advisory service, Mayfair Private, which brings together lawyers, accountants, education advisors, property advisers and psychologists. It also has an e-discovery business.

Another adviser said they would be interested in where any capital raise would be invested: ‘It likes to think it’s a bit of a mould breaker, and it’s an interesting firm. It has a good track record under Kevin Gold. If I was an investor I’d take a look at it.’

They added: ‘DWF did its full float, which I thought was slightly difficult timing. I’d hesitate to do anything this year.’

DWF was the sixth UK law firm to float and while by far the biggest, its £366m valuation was below expectations. Four of the firms to IPO recently reported their financial results, with each showing strong revenue growth.

For more on Mishcon’s startling run, read ‘The USP – What is Mishcon’s secret formula?’ (£)