20 February, 2024 | 2:53 pm

We note the statement from the Board of Currys (“the Company”) that it has received an unsolicited, preliminary and conditional proposal from Elliott Advisors (UK) Limited regarding a possible cash offer for the entire issued share capital of the Company at 62 pence per share. We also note that the Board has unanimously rejected the proposal as they believe that it significantly undervalues the Company and its future prospects. As the current largest shareholder in Currys (as at 20.02.24), with a combined holding of 14.6% of the company held across the strategies managed by the Redwheel Value and Income team, including the Temple Bar Investment Trust, we are in complete agreement with the Board that the business is worth substantially more than the 62p that Elliott have offered and we therefore support their decision to reject the offer.

This offer for Currys does, however, highlight a wider problem with the UK equity market which no longer seems to fulfil its primary purpose of price discovery and efficient capital allocation. Some of the largest market participants in the UK have been allocating away from UK equities, which are close to all time low valuations, and therefore should have the potential to offer attractive returns. Instead, investors are allocating to US equities, at close to all time high valuations, a level which has historically been associated with poor returns.[1] This has resulted in pockets of the UK equity market being valued significantly below the true value of the businesses. Unless this changes, it seems likely that we will continue to see overseas corporate buyers step in to take advantage of the depressed valuations of UK equities with ownership falling into foreign hands and the number of quoted UK businesses will continue to decline. We believe that a healthy equity market is beneficial to the functioning of the economy and would urge the relevant UK authorities to take action to incentivise investors to allocate to UK equities and save an integral cog of the country’s financial eco-system.

[1] Source: Hussman Strategic Advisors, 29th December 2023 

Past performance is not a guide to the future. The price of investments and the income from them may fall as well as rise and investors may not get back the full amount invested. Forecasts and estimates are based upon subjective assumptions about circumstances and events that may not yet have taken place and may never do so.

No investment strategy or risk management technique can guarantee returns or eliminate risks in any market environment. Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. Information contained in this document should not be viewed as indicative of future results. The value of investments can go down as well as up.

The statements and opinions expressed in this article are those of the author as of the date of publication, and do not necessarily represent the view of RWC Partners Limited or of its group companies (together Redwheel). This article is issued by RWC Asset Management LLP, in its capacity as the appointed portfolio manager to the Temple Bar Investment Trust Plc. Redwheel, is authorised and regulated by the UK Financial Conduct Authority and the US Securities and Exchange Commission.

Redwheel may act as investment manager or adviser, or otherwise provide services, to more than one product pursuing a similar investment strategy or focus to the product detailed in this document. Redwheel seeks to minimise any conflicts of interest, and endeavours to act at all times in accordance with its legal and regulatory obligations as well as its own policies and codes of conduct.

This document is directed only at professional, institutional, wholesale or qualified investors. The services provided by Redwheel are available only to such persons. It is not intended for distribution to and should not be relied on by any person who would qualify as a retail or individual investor in any jurisdiction or for distribution to, or use by, any person or entity in any jurisdiction where such distribution or use would be contrary to local law or regulation.

The information contained herein does not constitute: (i) a binding legal agreement; (ii) legal, regulatory, tax, accounting or other advice; (iii) an offer, recommendation or solicitation to buy or sell shares in any fund, security, commodity, financial instrument or derivative linked to, or otherwise included in a portfolio managed or advised by Redwheel; or (iv) an offer to enter into any other transaction whatsoever (each a Transaction). No representations and/or warranties are made that the information contained herein is either up to date and/or accurate and is not intended to be used or relied upon by any counterparty, investor or any other third party. Redwheel bears no responsibility for your investment research and/or investment decisions and you should consult your own lawyer, accountant, tax adviser or other professional adviser before entering into any Transaction.