Currys’ biggest shareholder has warned the stock market is not fit for purpose.
Redwheel, which owns 14.6 per cent of the London-listed company, backed the electricity retailer’s board’s decision to reject a £700m takeover offer from US hedge fund Elliott Partners.
But he said that without reforms, more undervalued British companies risk falling into foreign hands.
Ian Lance, co-head of Redwheel’s UK value and income team, added: “This bid for Currys highlights a wider problem with the UK stock market, which no longer appears to be delivering on its core discovery objective. pricing and efficient capital allocation.
‘Some of the biggest market participants in the UK have been investing away from UK stocks, which are near record low valuations.
Redwheel, which owns 14.6% of Currys, backed the electricity retailer’s board’s decision to reject a £700m takeover bid from US hedge fund Elliott Partners.
‘Instead, investors are investing in US stocks, with valuations close to all-time highs. This has resulted in some parts of the UK stock market being valued significantly below the true value of companies.’
Lance said: “Unless this changes, it seems likely that we will continue to see foreign corporate buyers stepping in to take advantage of depressed UK share valuations, with ownership falling into foreign hands.”
Companies such as chip designer Arm and travel company Tui have avoided the City in favor of foreign exchanges.
Efforts to revive the UK market with a series of reforms have so far not had much effect.
This weekend it emerged that New York-based Elliott had approached Currys but rejected the offer. It later emerged that Chinese online retail giant JD.com was also considering a bid.
Currys said Elliott’s offer “significantly undervalued” the business and analysts at Peel Hunt said the board was unlikely to accept an offer lower than £900m.
But analysts also warned it could mark the start of a series of takeover bids for UK retail companies whose bargain prices make them an attractive target.
Redwheel yesterday became the first major Currys investor to go public with its view on Elliott’s rejected bid.
He said he “completely agreed” with the board that the business was “worth substantially more” than the proposed 62 pence per share deal.
Lance said: “We believe that a healthy stock market is beneficial to the functioning of the economy and we urge the relevant UK authorities to take action to encourage investors to invest in UK shares and save an integral piece of the ecosystem. country’s finances”. ‘
