As Segro shares surge 7% after the property giant backed a £14bn takeover bid from US rival Prologis, Susannah Streeter, Chief Investment Strategist, Wealth Club, shares her insights.
“The shopping list for UK plc is getting longer with warehouse giant Segro the latest to be snapped up. The board has said it’s minded to accept the £14 billion bid from US property group Prologis. It’s another example of how Britain’s listed market is increasingly becoming a hunting ground for global investors looking for quality assets at discounted prices.
While this isn’t just a British problem, given that US and European exchanges are also seeing companies delist, there is a yawning valuation gap between UK equities and international peers, which is exacerbating this takeover trend here. The loss of more established public companies would be fresh blows to the depth and diversity of stock markets.
The case for reforming stamp duty on shares is becoming harder to ignore. The UK remains one of the few major markets where investors face a transaction tax when buying shares, putting London-listed companies at a disadvantage compared with many overseas peers where no equivalent charge exists. At a time when policymakers are trying to revitalise the UK capital markets and encourage more investment, it feels counterproductive to keep friction at the point where investors are putting money to work. Cutting stamp duty on shares could help boost liquidity, attract more international capital and make London a more competitive destination for companies and investors.
But while investors wait to see whether reform makes it onto the new government’s agenda, and as more established businesses disappear from exchanges, investors seeking exposure to the country’s growth stories will increasingly look elsewhere. Private markets are becoming home to a growing share of entrepreneurial and fast-growing companies, meaning investors who are able to diversify into carefully selected private assets could gain access to opportunities that are increasingly no longer available on public markets.
There is another reason why investors are increasingly looking beyond the traditional stock market. Public markets have been riding a bit of a rollercoaster, pulled in different directions by geopolitical tensions, uncertainty over interest rates and concerns that some technology stocks may have raced ahead of themselves. That is prompting some investors to explore where they can find different sources of diversification and long-term growth. Private markets are becoming a more accessible part of that trend, particularly as investors gain more opportunities to allocate portions of their SIPP investments to some of the world’s leading private equity and real asset managers. Now that Andy Burnham is settling into Downing Street, his tenure could provide further momentum to this shift. He has consistently argued for unlocking much larger pools of private capital to help drive regional development and infrastructure investment.
Of course, private markets are not a substitute for the flexibility of publicly traded assets. Investors need to be comfortable with money being tied up for longer and with the fact that valuations are not updated every day. But as policymakers search for the ingredients to boost long-term growth, the investment firms with the capital, expertise and patience to back projects over years, rather than quarters, could find themselves with a much bigger slice of the opportunity.”
