If UK based investing institutions remain cautious about investing in UK equities the 'market' will find a solution. As I mentioned in my last post the UK equity market is currently in run-off due to the consistent selling of UK shares by UK based investors. We are all pleading for policy makers to provide catalysts for capital to return to the UK public equity market. This they are starting to do, but it will take time to make a difference and meanwhile the 'Trump trade' is encouraging even more money into US dollar assets. So, we need more self help. We need to innovate, to find ways to create demand for UK Equities and improved price discovery. One possible way is replicating private equity in the public arena, with a good old fashioned buy and build acquisition vehicle (aka Lord Hanson, and the old Melrose team). There are lots of potential 'targets', lots of potential strategic investors, lots of existing investors who would like to keep skin in the game rather than sell out, enough reasonably priced credit, and a more accommodating set of listing and governance rules. Call this the free market equivalent of the Government's industrial strategy, with a single focus = creating wealth, by helping make UK Equities Great Again.
Michael Pagliari
3mo
The sentiment is laudable and much can done but without domestic growth there are few exciting prospects for most UK companies. Additionally the credentialed class seem intent on somehow magically growing our economy through austerity and tethering our economy to the EU which is growing at zero and deindustrialising at pace. On the other hand we may have an upcoming opportunity to link our economy to the US which is growing at 3% and is at the advent of a process of re industrialisation which could potentially have massive benefits for the UK .UK business needs to speak up and make clear to the government where our national interests lie. #equity #EU #US
Mark Wharrier
3mo
Ironically, the dismal measures in the Budget (NI, IHT, BADR) may prove the final straw for many private business and highlight the need for an exit or find new investors. For many, a listing may provide the ideal solution to both raise capital and provide liquidity for shareholders who need to sell. We just need new equity investors to start looking up rather than down, to think about future returns rather than obsessing over volatility.
Bradley Mitchell
3mo
I remember all those conglomerates from the 1980s BTR, BET, Trafalgar House, Hanson, ADT Problem was they were good at acquisition accounting, maybe less good at investing and growing businesses I still think a 3 point plan that no politician will sign up to, is the theoretical escape tunnel Scrap stamp duty Restore tax credit on UK equities for pensions End unfunded public sector final salary pension funds and replace with DC schemes with sizeable employer contributions
Thomas Cornwall
3mo
Ok. Let’s give it a go. If you have a list of quality targets, and institutional investors who’ll back it … my team and I will operate it.
Tom Tragett
3mo
Three words- rotation, rotation and rotation. All roads lead west at the moment. If you want to stop it there are solutions to the problem, but its pointless sharing them here, because they have no chance of being implemented under the current regime
M. S. SC. N.
3mo
sure you do
Ronald Evers
3mo
It might be time to rethink corporate governance. It’s surprising how easily boards can dismiss potential suitors without consulting shareholders, as seen with companies like Rightmove, Renewi, and TT Electronics.
Simulation Expert and Entrepreneur
3moIt is completely baffling when you consider many of these companies listed in the UK operate internationally. Take British American Tobacco for example, trading on a price-to-sales ratio of 2.9. Compare that to Philip Morris which trades on a price-to-sales ratio of 5.7. Why on earth would anybody buy Philip Morris over BAT simply because of the geographical location which it is listed in the world which, other than an ability to access better equity fundraising, has zero impact on the company's business operations? For the privilege of being listed in the US people are paying nearly twice as much for an equivalent company. I wish more investors thought more like business owners, imagining that they were actually buying the whole company and thinking about the price they are paying a little more.