The FTSE 100 closed up 1.2% on the month, but was severely beaten for pace by the FTSE 250 which ended the month 5% higher. Year to date, the mid-250 is steaming ahead against its bigger brother FTSE 100 index by 17.6% vs 10.2%.

The 250 market is much more representative of the UK economy as a whole, whereas the FTSE 100 is chock-a-block with ‘Old World’ stocks:

The main market is dominated by these big dollar earning stocks, and make up almost 40% of the index. Technology only accounts for 1.4% of the FTSE 100, compared to 28% for the S&P 500. True-UK PLC is much more represented in the FTSE 250, with businesses such as housebuilder Bellway, fitted-kitchen manufacturer Howden Joinery and Country Life and Horse & Hound magazine publisher Future, all being much more UK revenue dominated.

Private Equity has cottoned on to this voraciously and is hoovering up UK names, which they see (rightly) trading at substantial discounts to their international peers. The top two names in the FTSE 250, and potentially returning to the FTSE 100, are on the back of takeover bids; Meggitt is in a £7 billion takeover battle between Parker-Hannifin and TransDigm, whilst Wm Morrisons is also under offer for up to £7 billion from Fortress Investment Group.

In 2021, the UK has been the hotbed for public M&A and deal making, with over $229 billion of deals completed, with four more months of the calendar year remaining. Avast, Sanne Group, Ultra Electronics, Asda and John Laing Group have all been taken over or about to be taken over. There really has been a fire sale on UK PLC, and why wouldn’t there be when the UK stockmarket has been trading at depressed valuation multiples in comparison to its global peers, see chart, right.

The UK is home to some exciting businesses, which are fully tuned in to the global recovery and UK bounceback, yet remains cheap. The longer this continues, the more we will see UK PLC moving into private hands.