Yahoo Finance Too many good London stock market companies are being sold to foreign buyers
The City needs more than Moonpig
(Getty Images)If you’re a patriot, and I hope you are, you should be delighted London has won over the founders of Trustpilot to float on our stock market.
The more tech companies choose Britain for their IPOs, the more investor expertise will grow here and the easier fast growing companies will find it to achieve the backing and valuations they’d get if they went for the safe option of Wall Street or Asia.
That, in turn, means more skilled City jobs to boost the UK economy and take up the slack left by Brexit.
This paper has been banging on about the need to reform the London listing rules to make our markets more attractive for tech entrepreneurs for much of the past year. It will be gratifying if the Chancellor hints at what he’s planning to do in Wednesday’s Budget.
Amid all the hype around tech stocks, though, it’s as important for investors not to overlook stocks here in other sectors who have been left behind in the dash for growth.
There are many great companies on the UK market which, despite recent rallies, are still undervalued, falling prey to foreign bargain hunters.
Some £20 billion-worth of UK businesses have been sold overseas since we fully left the EU in January.
These businesses are being bought because the private equity and trade buyers snapping them up can see that they’re too cheap.
They also recognise you don’t have to be a tech company to be worth owning.
Only today, we saw knockout numbers from Reach, the newspaper group; an upgrade in forecasts from Halfords and Speedy Hire; optimism from power generators supplier Aggreko and Vertu Motors, the car dealer.
I’ve no idea which, if any, will receive takeover bids. But shareholders of all decent companies generating old-fashioned stuff like profit and cashflow should think carefully how much long-term value they’re throwing away when they accept foreign bidders’ cash now.
If market sentiment turns and favours reliable, cash-generating assets, investors may rue the day when all they’ve got left in their portfolios is some Moonpig and Trustpilot.
