MFM UK Primary Opportunities | Fund Update | 2021

8th July 2021

MFM UK Primary Opportunities | Fund Update | 2021

June: Why so much M&A activity in the UK currently?

We have commented for a number of months on the growing M&A activity in the UK market. It continues to trade at a material discount to other major markets. In our view, this gap either closes or more companies will be taken private by overseas buyers and private equity which is awash with cheap money. This month saw WM Morrison turn down an £8.7bn bid by private equity firm CDR – we believe attracted by the value in the company’s property portfolio. On a much smaller scale, but again underlining the value that exists, fund holding Anexo, a credit hire and legal services provider, received a takeover approach. Discussions are ongoing and we await to see if the offer be sweetened.

The pace of equity raises remains unrelenting in what is proving a busy summer. There is a substantial pipeline of deals into the autumn and our primary opportunities process is well placed to take advantage of the demand for equity raises as companies seek to expand into the economic rebound. Craneware, Longboat Energy, Revolution Bars, Mattioli Woods, Gresham Technologies and Brickability all raised fresh equity and were added to the portfolio. We also acquired Victorian Plumbing at IPO.

Markets ended off the highs for the month on higher US inflation and fears of a rate rise as early as 2022. Miners gave back some of this year’s impressive gains on softer commodity prices as China released excess stocks onto the market. Some nervousness remains over Coronavirus and the latest delta variant as the UK pushed back its re-opening date, much to the chagrin of the leisure and hospitality industry.

In June the MFM UK Primary Opportunities fund returned -0.69% compared with 0.12% for the FTSE All Share and -0.20% for the IA UK All Companies sector.



Craneware is a software company selling billing software analysis to the healthcare sector in the US. We acquired the shares, at an 11% discount to the previous night’s closing price, as part of a £140m placing to help fund the acquisition of a Florida based software company.

Longboat Energy

Longboat is a North Sea focused gas and oil producer and explorer. It is the same management team behind the successful Faroe Petroleum, which was acquired in 2019 for over £600m. We acquired the shares as part of a £35m equity raise, its first major raise, to acquire a portfolio of assets. Seven wells are due to be drilled in the next eighteen months and we anticipate high levels of news flow which should act as a catalyst to the share price.

Revolution Bars

Revolution operates 66 food and drink venues in the UK, under the brands Revolution and Revolucion de Cuba. We acquired the shares as part of an equity raise that strengthens the balance sheet following the prolonged impact of Covid but also provides capital for further site expansion. With the country unlocking, we anticipate Revolution being a beneficiary.

Mattioli Woods

Mattioli is a financial advice and wealth management company. We acquired the shares as part of a £110m equity raise to acquire a financial advice company and an alternative asset manager, lifting total assets to over £16bn. The shares have appreciated over 10% from their placing price.

Victorian Plumbing

Victoria is the UK’s leading online bathroom retailer. We acquired the shares at IPO in what was the largest ever listing on the AIM market with a market capitalisation of £850m. We are attracted by the Company’s growth profile in a market that is seeing online penetration.

Gresham Technologies

Gresham is a software company providing reconciliation solutions into global capital markets. It has a blue-chip client base of financial institutions who are increasingly requiring their services as financial markets’ reporting grows in complexity. We acquired the shares as part of a £21m placing to fund an acquisition that gives the Company greater reach in the US.

C&C Group

C&C is a FTSE 250 drinks company, best known for its Bulmers and Magners cider brands. We acquired the shares following a rights issues to bolster the balance sheet following the effects of the pandemic where sales to pubs and restaurants had suffered. We believe the Company is well placed to benefit from the opening up of the economy and the shares are already 10% above the placing level.


Brickability is a leading supplier of bricks to the UK’s major housebuilders. We acquired the shares as part of a £40m placing to acquire Taylor Maxwell, a leading supplier of timber and non-combustible cladding. It is a Company that Brickability had long wished to acquire. We believe the combined, larger Company, offers an attractively valued and growing dividend investment.


In what was another busy month for purchases, we raised money by selling mid-caps Grainger and Hilton Food for profits. Our small holding in Dr Martens was also sold following an update that was not quite as good as had been anticipated. Ocado was also sold on concerns its lofty valuation may come under pressure as the economy re-opens. Small cap healthcare company, Venture Life, was also sold following its shares rising on news of an acquisition. As ever, we are selling or reducing holdings in those companies where we believe we have seen much of the share price upside already and investing in new primary opportunities that we believe will give us a greater return – whilst keeping a well-diversified portfolio across sectors and market capitalisations. This simple, yet effective process, is what produces the consistent outperformance that the fund delivers.

Cumulative Performance (Total Return %) – June 2021

Fund/Benchmark Name 3M to 30/06/2021 6M to 30/06/2021

Year to 30/06/2021

3 Years to 30/06/2021 5 years to 30/06/2021 Since Inception (28/05/1997)
MFM UK Primary Opportunities P Acc 5.6 14.4 31.1 19.4 72.8 501.0

Quartile Ranking

IA UK All Companies

2 1 2 1 1 1
IA UK All Companies 5.6 11.8 27.7 11.1 48.5 309.9
FTSE All Share 5.6 11.1 21.5 6.3 36.9 300.4

Source: FE: 30/06/2021


Discrete Annual Performance (Total Return %) – June 2021

Fund/Benchmark Name Year to 30/06/2021 Year to 30/06/2020 Year to 30/06/2019 Year to 30/06/2018 Year to 30/06/2017
MFM UK Primary Opportunities P Acc 31.1 -9.3 0.4 8.6 33.2

Quartile Ranking

IA UK All Companies

2 2 2 2 1
IA UK All Companies 27.7 -11.0 -2.2 9.1 22.5
FTSE All Share 21.5 -13.0 0.6 9.0 18.1

Source: FE: 30/06/2021

Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested.