EDITOR’S COMMENT While being out and about in the market this week, I asked a question about optimism: how optimistic are you feeling about the future of the UK commercial real estate market? Interest rates are falling, we’ve got a new government in place, the sun has shone sporadically, it’s all feeling a bit better, right?
Sure, went the response, but what does it matter? There is an easy story to tell about the investibility of the UK, how there’s good money to be made here, but no one is listening. Or at least no one is biting.
There is no doubt about it. The investment and investor market in the UK is depressed, and the small but growing amount of dopamine it is being fed doesn’t seem to be having too much of an impact on it.
That is certainly the belief from Miami-based investment house Buckley Capital Management, which this week sent a lengthy open letter to its fellow shareholders in flex giant IWG. Buckley is a top 15 shareholder in IWG and is fed up that its investment in the business isn’t paying off. It has had enough of its share price languishing 50% lower than it was five years ago, despite the business being on track to deliver record results. And Buckley blames the UK investment and investor market for the poor performance.
As a result, managing partner Zach Buckley has written to IWG’s board urging it to quit the London Stock Exchange and re-list in the US, where it sees a “strategic opportunity” to enhance shareholder value. A US listing, said Buckley, would expose IWG to a new and more liquid market, with “investors who have greater appreciation of its leverage levels and business model”.
“The more efficient capital market in the US can help the company realise intrinsic value in a timelier manner,” added Buckley, “which the UK market has failed to do over the last five years.”
The investor pointed to Irish building materials provider CRH as an example, saying that, since moving its primary listing to the US in September 2023, the group’s share price had risen by 51.4%.
It wants the same for IWG.
And if that doesn’t happen, Buckley thinks the business should cash out and go private, seizing on the immense interest he reckons is out there.
“Firms such as Terra Firma, TDR Capital, Starwood and Lone Star were rumoured to have expressed interest back in 2018,” he said. “Today, IWG is in much better shape, with a higher quality revenue mix, greater profitability, significantly improved competitive position and clearer growth prospects. Yet it is trading at a significantly lower multiple. Given the significant interest in the past, if the public market fails to recognise IWG’s value, we strongly recommend that management consider selling the company.”
It will be interesting to see how Mark Dixon and the team respond. Dixon isn’t opposed to a US switch. The group has already switched to reporting in US dollars and around half of its revenue and profit comes from America. And, said Dixon, if more and more US investors are joining its share register and more and more are demanding it, then why not leave the UK?
On paper, a move makes sense. If your shareholders are US-based, if the investor market is a bit more bullish on the other side of the pond, if it’s just a bit more convenient, then why not? I get it. Everything is better in America, isn’t it? And, surely, after the Taylor Swift endorsement of Kamala Harris, things are only going to get better in the US.
But, what about us? Don’t we need to make the UK great again? Surely, whether you’re a Dixon fan or not, we should be fighting for businesses to remain here in the UK and we should be showcasing to investors how valuable our market is?
And let’s face it, haven’t we only heard horror stories of the office market out there – flex or not? I know WeWork isn’t IWG, but if a flex giant can’t make it there, can it make it anywhere?
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