Listed in the U.K., Ashtead Technology Holdings (“Ashtead”) is the globally leading, independent provider of rental equipment for the offshore oil & gas and wind industries. The company’s fleet of nearly 20,000 rental items support offshore vessel operators through the entire life cycle of their operations, from site characterization through construction, operations & maintenance, and de-commissioning. In addition, Ashtead provides a number of value-added services, including system design, training, technical consultancy, and testing and calibration; it will even at times deploy its own personnel onto the customers’ vessels to operate and/or oversee their equipment. Ashtead’s niche equipment and services fill a critical gap in the internal equipment fleet of its customers and enables them to effectively conduct offshore operations while minimizing vessel downtime. It provides this value proposition to a diversified group of more than 1,000 customers, who typically charge out hundreds of thousands of dollars per day for the operation of their vessels and participate in high-value/high-risk projects that require substantial levels of investment. The last thing they need is vessel downtime as a result of unavailable or faulty equipment. Moreover, given that Ashtead’s equipment also accounts for less than 1% of their total charge-out rates and is paid out of their operating budgets, customers care most about equipment quality and availability rather than price. This has allowed Ashtead to consistently and meaningfully raise prices on its rental equipment over time. Ashtead also enjoys significant customer retention, having worked with 8 of its top 10 customers for more than a decade, and tends to operate under multi-year framework agreements with its largest customers. This loyalty stems not only from Ashtead’s scale advantage, which allows it to provide the industry’s broadest product assortment and act as a global one-stop-shop for its customers, but also from its embeddedness within its customers’ operations and its technical consultancy and know-how, which the customer often lacks in-house.

Its share price has fallen so far in 2025, largely due to geopolitical concerns. Despite the recent decline, the company continues to exhibit robust business fundamentals and growth. In its last market update, issued in May, Ashtead produced an Annual General Meeting statement in which it confirmed that trading for the first four months of 2025 was in line with expectations while reiterating confidence in the full-year outlook for double-digit growth, underpinned by record customer backlogs. Management also noted that it is targeting a move from the Alternative Investment Market (AIM), which is tailored to smaller high-growth companies, to the more established Main Market in the U.K. This move, which should be completed by year-end, is expected to attract greater interest from tracker funds that allocate capital to constituents of the major FTSE indexes, which are generally restricted to companies on the Main Market. In mid-March, Ashtead also published results for fiscal 2024 in which the company delivered 14% organic sales growth (52% reported growth), with 35% adjusted EPS (earnings per share) growth. Given the company’s quality and growth, we believe its current valuation at less than 10.0x P/E remains highly compelling.

CVS Group is one of the leading providers of veterinary healthcare in the U.K. Its more than 450 vet practices offer high-quality primary care and, to a lesser degree, more advanced specialist treatments. The company also operates an online retail store and diagnostic laboratories. One of the key attractions is its diversified customer base that has proven over time to be both extremely loyal and price inelastic. The company serves more than a million pets annually, while its services cost pet owners a few hundred pounds a year, a price they consider well worth the health of their companion animals which are increasingly viewed as a part of the family. CVS’s customer loyalty, which has been described as ‘near absolute,’ is underpinned by strong emotional switching costs and is further supported by studies pointing to the immense recession-resilience of the veterinary healthcare space. CVS has also long been a consolidator within its industry. With corporate ownership of the U.K. vet industry having increased from less than 20% in 2009 to 60% today, CVS has now set its sights abroad, having recently expanded into Australia, another sizeable market where corporate ownership is still just 15%.

CVS’s shares have increased over 60% year-to-date in U.S. dollar terms thanks to improving sentiment surrounding the U.K. Competition and Markets Authority (CMA) investigation into the vet industry, which was initiated in September 2023. The investigation was launched on concerns that increasing industry consolidation might result in unfair pricing practices amid the U.K.’s consumer ‘cost of living crisis’ and thus initially muted investor sentiment for the industry. However, market participants increasingly believe that U.K. initiatives to push a pro-growth agenda and prevent excessive regulation have increased the odds of a favorable outcome of the CMA investigation later this year. These initiatives include the Chancellor calling for an audit on the CMA to scrutinize its role in fostering or hindering growth, the U.K. Business Secretary outlining a new strategic direction for the CMA (emphasizing the need to become less risk averse), and the recent replacement of the CMA Chair with former head of Amazon U.K., Doug Gurr. Meanwhile, recent working papers published by the CMA concluded that the veterinary industry is more competitive than initially thought and that remedies should focus on transparency rather than draconian price controls. Despite the strong share price rally this year, we note that the current EV/EBIT multiple of 13.0x still reflects a 35% discount to long-term averages. (EV/EBIT, or enterprise value over earnings before interest & taxes, is a valuation tool.) We therefore believe that CVS is also a prime take private candidate, as the veterinary space has been consolidating, with acquisitions often at multiples of 20.0x or even higher.

Another U.K business, long-time holding Marlowe, is a B2B company that provides a range of critical safety and compliance services, including fire safety and security, water treatment, air testing, and other environmental services. Marlowe recently received a bid to be acquired at a 26.5% premium by Mitie Group, a larger U.K. company that offers building and support services, including air conditioning, industrial painting, and engineering services, as well as support services such as catering, cleaning, security, and waste services. Marlowe’s expertise in safety and compliance services is in high demand, and the acquisition gives Mitie a crucial presence in these fast-growing areas. Marlowe was also the subject of private-buyer interest in 2024, when the company sold its Governance, Risk & Compliance (GRC) segment, which comprised approximately 40% of its profits, to a private equity company for the equivalent of over 120% of its market capitalization at the time. The company’s share price has increased by over 100% in U.S. dollar terms over the last 12 months ended 6/18/25.

Headquartered in Australia, Johns Lyng Group (“JLG”) is a leading integrated building services company that recently confirmed its receipt of a non-binding indicative offer proposal from Australian private equity company, Pacific Equity Partners.

JLG offers disaster recovery services, responding promptly to damage from weather, fire, floods, and other events to repair and restore buildings and their contents. The company also provides a wide range of recurring essential services, such as the inspection of smoke alarms, electrical and gas systems, and property management. Because JLG provides its services through an extensive network of more than 14,000 subcontractors, its business is both asset light and highly scalable. JLG’s engagement with insurance companies is governed by panels to which it is appointed for 3-5-year periods—and these panels have an almost 100% renewal rate. Moreover, JLG’s revenues are largely de-coupled from the economic cycle because it depends on damage events and natural disasters, responding on average to more than 135,000 cases annually, 80% of which are typically considered recurring ‘Business as Usual’ (“BaU”) events such as dishwasher leaks. Longer-term, JLG benefits from the increasing prevalence of natural disasters resulting from climate change, industry consolidation (JLG estimates that, despite its market leadership, it still has a less than 10% market share), and the potential for significant long-term growth in the U.S., where it has been expanding and now accounts for nearly 20% of revenues.

It's worth pointing out that the companies discussed above have been or are in our view likely to be acquisition targets. Remarkably, the Fund has experienced 11 consecutive quarters of take-private activity, and the number of holdings subject to disclosed take-private attempts over this period is the equivalent of nearly one quarter of our current holdings. We continue to expect heightened private buyer interest in the portfolio’s holdings, reflecting what we believe is a historic dislocation between their intrinsic values and their share prices. This dislocation is creating what we see as a historic profit opportunity for public equity investors and allocators willing to take a longer-term and forward-looking view.

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