In the Hot Seat by Miles Nolan

The well-decked-out offices at 25 Ropemaker Street at Moorgate are home to Liberum Capital, a private broking firm owned by its employees. Progress has been rapid, with sales last year of £44 million and pre-tax profits (before bonuses) of £18 million – not bad for a September 2007 start-up.

Based on the 12th floor, I meet 42-year-old chief executive Simon Stilwell on a rainy day in April to find out the secret to his success. He studied geology at Durham University but with a hankering to join the army he did just that on graduation. Having joined the Gloucestershire Regiment, he served in Northern Ireland, Cyprus, Kuwait and Bosnia.
However, a career in the City beckoned for Stilwell and in 1996 he joined the venerable institution Beeson Gregory – the forerunner to Evolution Securities. There he picked up the tricks of the trade in his role as a small-cap salesman, helping fledgling companies secure much-needed capital. It was also a time that Beeson was heavily involved with the ill-fated Easdaq market.

From Beeson he moved to Collins Stewart in 2002, where he continued in sales and also tried his hand at research. At his new employers he met equities chief Shane Le Prevost and they set about working on a business plan to create a new venture – Liberum was born.

Creative challenge
The impressive Stilwell is proud of the achievement, and rightly so. He says, ‘We believed we could do a better job than the competition and have enjoyed the challenge of creating something.’

Liberum now employs 146 people and from an initial value of £1 million was last year said to be worth £25 million. ‘We always planned to focus at the mid- to large-cap end of the market,’ he says, arguing that it is always much easier to move down the scale than up it. With 32 corporate clients, the average market value is a chunky £370 million. Stilwell says, ‘It’s a crowded market place so we need to differentiate ourselves.’

Proof of their success is the fact that Liberum has made it into the top 10 with seven leading UK institutions. The quality of research is a major factor in winning mandates, and Liberum now writes on 20 sectors with 240 stocks under coverage – the hope is for this to reach 300 by the end of the year.

Corporate broking is big business for Liberum, and last year it raised £1.1 billion for its clients. The pipeline of new work looks good, with Liberum recently named as a co-manager on the upcoming $60 billion IPO of commodities trading giant Glencore.

Clients including a US-based water business and mining firm emanating from Russia are also planning to list. In addition, a number of secondary fundraisings are on the agenda. Existing clients include Aquarius Platinum, European Goldfields and AIM counter Staffline.

Sales and trading boost
Aside from market making, in which Liberum now trades in 900 stocks, the sales trading arm is a major profit driver. An office was opened in New York in 2009 to help boost its efforts and so far is winning good traction. Of the revenue achieved last year, £26 million was from sales and trading commissions.

The name Liberum is derived from the Latin for ‘independence’. There is no intention to float or to acquire rivals – instead growth will be organic. As Stilwell puts it, ‘We have a lean management structure and are masters of
our own destiny, with decisions made quickly.’

Stilwell lives in Islington, has two sons and is shortly to re-marry. He has taken part in several triathlons but also has
an interest in ‘wild swimming’, which involves swimming in lakes, lochs and tarns.