Kuwaiti investors pounce on venerable City broker WH Ireland

A Kuwait-based company is poised to pounce on WH Ireland (LSE: WHI.L - news) , one of the best-known stockbrokers in the City of London (LSE: CIN.L - news) , amid expectations of a fresh wave of consolidation in the sector.

Sky News has learnt that Kuwaiti European Holdings Group (KEH) is close to announcing an agreement to purchase close to 30% of WH Ireland's shares, potentially as the precursor to a full takeover of the London-listed firm.

A deal could be announced as soon as Monday morning, according to insiders.

The Kuwaitis are said to be purchasing the shares from a collection of high-profile investors, including Lord Marland, a former Conservative Party treasurer, and Rupert Lowe, former chairman of Southampton Football Club.

If the purchase by KEH goes ahead, it would be the latest in a string of Middle Eastern investments in City brokers following a long-standing relationship between a Qatari group and Panmure Gordon, one of WH Ireland's rivals.

KEH is spearheading a project to build Paramount Park, a major new tourist attraction in Kent, and already owns Ebbsfleet United, a football club based in the county.

The reasons for its interest in WH Ireland, which also has a wealth management division focused on private clients, were unclear this weekend.

The Kuwaiti group is headed by Abdulla Al-Humaidi, a member of one of the Gulf state's wealthiest families.

WH Ireland has endured a difficult period, having been hit with a £1.2m fine by the Financial Conduct Authority earlier this year for failures of controls within the firm.

The broker was banned by the City watchdog from taking on new clients for 72 days, a prohibition which has now been served.

Its problems go beyond regulatory sanctions, however, with the broker also affected by a wider downturn in the market for providing services to smaller quoted companies.

A number of firms, including Oriel, have been forced into the arms of bigger competitors, while others have turned to investors to raise new funds.

In July, WH Ireland reported that revenues had slumped by a quarter during the first half of its financial year, partly as a result of the FCA ban.

It now has a market capitalisation of just £26m.

The firm's chief executive, Richard Killingbeck, said at the time of the results:

"The UK EU referendum result, rather than removing uncertainty which all market participants sought, has created more, albeit different, uncertainties.

"This is not good for short-term sentiment and I fear that over the summer months investor confidence will remain very cautious and risk averse.

"This will therefore continue to impact the trading outlook for both of our divisions."

WH Ireland could not be reached for comment on KEH's interest.