Investing in UK companies

Investing in UK companies

Scrolling through online news channels the following headline from the New York Times caught our eye: “Private Equity Firms all want the same thing: British Companies.” [1] To regular observers of the market this is perhaps not a surprise. Take, for example, the interest shown in UK supermarkets in recent months with a bid for Morrisons in June leading the way to a rise in the share price not just of Morrisons but also of (at the time of writing) Sainsbury’s, M&S, and Tesco amongst others.

The simple answer might be that supermarkets are benefitting from the ‘pandemic boom’ with Clive Black, of Shore Capital commenting to thisismoney.co.uk [2] that “These previously unloved, out-of-kilter supermarkets are now seen as a square peg in a square hole.”  However, it’s not just supermarkets that are attracting overseas interest. According to the NY Times article, so far this year thirty nine bids to take UK companies into ‘private’ hands have either been completed or proposed, half of which have gone to private equity companies. This has led private equity firm Blackstone to comment that “there is no shortage of opportunity in Britain.”

How this interest in investing in UK companies will be affected by changes in areas such as Dual Class Share Structures, free floats, and Special Purpose Acquisition Companies (SPAC) which arose from the UK Listings review which reported in March 2021 remains to be seen. For example, the relaxation of SPAC rules only came into effect on 10th August. [4] Nevertheless, the overwhelming impression is that overseas investors see the UK as a place in which to do business.

Whilst some investors may go down the outright purchase route, others may decide that it is preferable to set up a new company in the UK, either as an overseas subsidiary or on a standalone basis.  As a member of the UK Government’s Investment Support Directory, Elemental has the expertise to provide advice and practical assistance both on setting up a UK company from overseas and on setting up a UK subsidiary. This includes company incorporation, legal and domiciliation services alongside accountancy, tax and compliance packages.

We also provide advice and practical assistance to those who are looking to buy a UK company from abroad. Particular areas for consideration here include pre-sale requirements such as due diligence, the price structure and legal documents whilst also preparing for post sale considerations such as the new share/ownership structure.

[1] https://www.nytimes.com/2021/08/31/business/private-equity-uk.html

[2] https://www.thisismoney.co.uk/money/markets/article-9937917/Buyout-frenzy-adds-8bn-UK-supermarket-shares.html

[3] https://www.gov.uk/government/publications/uk-listings-review

[4] https://www.fca.org.uk/publication/policy/ps21-10.pdf

Alison Griffiths
alison@gerranium.co.uk
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