‘If we don’t do it, somebody else will.’

The quote above, from US politician Bart Gordon, came in 2004 in response to President George Bush’s new space initiative with a long-range goal of returning humans to the moon. Following the recent successful Artemis II lunar fly-by, taking humans further from Earth than ever before, the timeline remains early 2028 for Artemis IV to land humans on the moon once more.

We have been quiet on the commentary front of late as, in our view, there are only so many times we can say the same thing in different ways before the message becomes stale. For several years we have argued that, as a consequence of a seemingly endless array of issues, the UK equity market, and particularly the mid and small cap areas of the market, is offering a once in a generation value opportunity that patient investors should benefit handsomely from in the years ahead.

We will not revisit the extensive list of travails that have got us here, but just as we entered 2026 with a degree of optimism, the market has taken another two major body blows. Firstly, the impact of the war in Iran, and specifically the consequent rise in energy costs, and secondly, yet more domestic political turmoil following deep dissatisfaction with the performance of the ruling Labour Party.

Given the above, it would seem perfectly understandable for investors, as they have for several years, to keep shunning the UK market indefinitely. However, it is our firm belief that value ultimately prevails in equity markets and, if we don’t take advantage of it, somebody else will. As it happens, despite all the negative headlines, others are already taking full advantage, as this recent chart from Bloomberg illustrates.

As can be seen, there has been a marked acceleration in takeover activity in the UK in the first four ½ months of the year, both by number of targets and their potential size. Indeed, in value terms it represents greater than 250% growth on the same period a year ago. Overseas corporate and private equity buyers remain the keenest participants, attracted by the global, high-quality nature of many of our businesses, trading at significant valuation discounts to international peers by virtue of being listed in London rather than elsewhere.

Examples of recent corporate transactions include asset manager Schroders agreeing a £10bn sale to US investment giant Nuveen, ending more than two hundred years of family ownership. More recently, one of the oldest FTSE constituents, ingredients maker Tate & Lyle, has been the subject of a conditional cash takeover from US-based Ingredion Inc – at a 64% premium to the prevailing share price. Private equity investors have been equally busy, with the biggest deal being the proposed £9.4bn acquisition of product testing business Intertek by Swedish group EQT at a 54% premium. The table below, from Deutsche Numis, offers more detail on certain UK transactions in 2026 so far, with those shaded grey yet to be finalised.

To be clear, we take no pleasure whatsoever in seeing our world class companies, often with decades if not centuries of history, being removed from public markets - often at prices, notwithstanding the substantial short-term premiums, which look too cheap from a long-term perspective. However, we can certainly see the attraction and fully understand the acquirors rationale.

We recognise, of course, the significant issues the UK economy, alongside many other geographies, faces. We understand the long-term structural issues UK capital markets have been contending with for years. We also get how exciting the latest ‘hot’ artificial intelligence investment ideas may seem – ideas that appear demonstrably lacking from the UK market.

These are, however, the very issues that have created the once in a generation value opportunity that we see in the UK today, and value ultimately prevails. If we don’t take advantage, others can and clearly will. Unlike humanity’s revisit of the moon, let us hope it does not take another 24 years for domestic retail and institutional investors to reach the same conclusion and do something about it.