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Savvas Savouri of Toscafund, the investment manager, said the current environment was similar to that of 1992, when the British pound collapsed as Britain pulled out of the European exchange rate mechanism.
“There is currently immense opportunism on the part of foreign buyers,” he said. “The environment is perfect for them, thanks to the weakness of the British pound following Brexit and the UK stock market crash last year. The appeal is that UK stocks are cheap, but also there are great opportunities for businesses as the economy rebounds. ”
The hottest sectors so far this year are consumer goods and services, with 359 transactions, followed by technology with 309 and finance with 267, according to Refinitiv. In each of these areas, there are businesses that seem tempting to foreign investors.
Richard Penny of Crux Asset Management said Brewin Dolphin, a wealth management firm, was a prime target for a foreign buyer looking to enter the UK investment management industry.
Last week JP Morgan bought low-priced investment manager Nutmeg for £ 700million, which underscored the importance of the UK financial market to foreign banks.
Mr Penny said another target could be Premier Foods, which owns brands such as Mr Kipling and Ambrosia. “It has a price-to-earnings ratio – which measures the price of stocks to earnings – of 10, which is well below the stock market average,” he said. “There was recently an agreement for Valeo Foods, which sells similar products. If Premier Foods is bought, shareholders could be in line for a 30-60% gain.
Enterprise software companies Essensys and First Derivatives could also be targets, as could palm oil company MP Evans, Penny added.
“Software companies are smaller here than in America, but are about three times cheaper based on stock price relative to sales,” he said. “MP Evans’ assets, such as its palm plantations, are worth 40% more than today’s share price suggests and it has already been the subject of an offer.”