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Institutional investors see UK equities as undervalued, says new research

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New research from investment holding company MBH Corporation reveals that 85 per cent of professional investors from the UK, US and Germany believe UK equities are undervalued.

The investors, who collectively manage over USD300 billion, say one of the key reasons for optimism around UK equities is that the country has one of the best Covid-19 vaccination programmes in the world, and this is contributing to a faster recovery and greater economic growth than many other developed countries.

Over the next 12 months, 47 per cent of the professional investors interviewed said they will increase their allocation to UK equities compared to just 5 per cent who expect to reduce it. The corresponding figures for three years are 56 per cent and 11 per cent respectively.
 
MBH Corporation plc, a diversified investment holding company listed in the US and Germany, which acquires successful small businesses, says micro caps and small caps can be among the best performers as economies recover from a downturn. Its research reveals that 20 per cent of the professional investors interviewed expect to increase their allocation to UK microcaps between now and 2023, compared to 8 per cent who will reduce their exposure. The corresponding figures for small caps are 33 per cent and 10 per cent respectively.

MBH currently has 26 successful and profitable small businesses across multiple geographies and industries, and 20 of these are based in the UK. 
Callum Laing, CEO MBH Corporation plc, says: “UK equities took a hit after 
Brexit, and along with stock markets in general, they suffered during the early stages of the Coronavirus crisis. However, they have bounced back but our research shows that many professional investors still believe they are undervalued, and they are looking to increase their allocation here.

“Overall, they are also positive towards UK smaller stocks, and this can partly be explained by the fact that micro and small caps can be nimbler and adapt better to changing circumstances than larger businesses, and they can also bounce back better.”

MBH will continue its highly focused growth of well-established profitable small businesses across multiple geographies and industries. It targets companies carrying little to no debt, delivering around USD1 million – USD10 million EBITDA and are generally still run by their founders who become co-owners of MBH.

By leveraging its unique Agglomeration strategy, MBH can create substantial shareholder value through the consistent and accretive acquisition of excellent companies. With Agglomeration™, profitable companies convert their private shares into public shares or bonds in MBH Corporation plc in a perpetual earn-in model. Company owners are then incentivised to accelerate their growth trajectory using the resources of the plc including expertise, skill transfer of best-in-class practices, cross-selling to other Group companies and where appropriate, zero cost funding for new growth projects.

Each Group company retains its autonomy and follows appropriate corporate and financial governance. Business owners are also incentivised financially to enhance shareholder value through a share bonus scheme aligning their interests with public shareholders.

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