A classic indicator of a disconnect between short-term concerns and longer-term opportunity is when non-equity investors start to buy the assets.
This is clearly happening, with 10 bids for FTSE 250 companies progressing currently.
This is unsurprising given the de-rating of the FTSE 250, with the overall index -18% YTD and 80% of the members down on the year. This has driven heightened interest from overseas and private buyers.
There have been 14 proposed and announced bids in the past six weeks, adding up to £21bn of equity value. This should help to replenish cash positions for hard-pressed equity investors.
Peel Hunt, the investment bank, has published a note on the accelerating bid activity in the UK, noting that non-equity investors currently starting to buy the assets is a ‘classic indicator of a disconnect between short-term concerns and longer-term opportunity’.