World-Class Innovation, UK Listed

Ask investors to name the world’s innovation hubs and the UK may not be the first market that comes to mind. It should be.

The UK is often perceived as a market dominated by mature industries such as banking, energy and consumer staples. Yet beneath the surface lies one of the world's most innovative economies. The UK ranks sixth globally in the World Intellectual Property Organization's Global Innovation Index¹ and is home to four internationally recognised innovation clusters—London, Cambridge, Oxford and Manchester. The country also benefits from a world-leading research base, strong universities and a vibrant ecosystem of entrepreneurs, investors and technology businesses.

The scale of investment in innovation is substantial. UK expenditure on research and development exceeded £72 billion in 2023², equivalent to 2.6% of GDP, while UK businesses alone spent more than £55 billion on R&D in 2024³. The UK also provides the highest level of government support for business R&D as a percentage of GDP among OECD countries⁴, reflecting a long-standing commitment to fostering innovation and commercialisation.  Innovation is not confined to a handful of technology companies. The country's strengths extend across many of today's most important technological fields.

Source: Global Innovation Index 2025.

Innovation and Listed Opportunities

The investment opportunity starts when this innovation base meets the listed market: specialist UK companies using research, engineering and intellectual property to compete globally, often away from the spotlight.

Innovation does not always look like software or an AI trade. In the UK market, innovation often appears in less obvious but economically important places. It frequently sits in specialist sectors where deep expertise, intellectual property and long-standing customer relationships matter more than market headlines. For example:

Avon Technologies focuses its innovation on advanced material science, mission-critical respiratory protection and high-performance head protection systems. The company invests significantly in research and engineering, with a growing percentage of revenue assigned to new product development to support military and first-responder contracts. This innovation is driven by an active collaboration and co-funded research & development (R&D) programs with the U.S. Department of War and the UK Defence Science and Technology Laboratory. This results in Avon having market leading positions in the respiratory protective equipment market in the U.S. and NATO, allowing for greater R&D budgets than competitors, further entrenching their market position.

DiscoverIE Group focuses on engineering-led innovation to design customized electronic components for five structural, sustainable growth markets: Renewable Energy, Transportation, Medical, Security and Industrial & Connectivity. While the company does not make complete products, its components are used in some of the most fast-paced and innovative end-markets such as robotics, wearable medical devices and artificial intelligence. A key component of the growth strategy has been to acquire businesses with structural growth end-markets where their products are designed in for many years, with the latest acquisition’s largest customer being the world leader in low-earth-orbit satellites. Some of the company’s customers are seeing very strong growth and very high public market valuations; DiscoverIE is participating in the growth as an important, collaborative and designed in supplier to some of the most cutting-edge products.

Both Avon Technologies and DiscoverIE are trading on a discount to international peers despite both generating over 90% of revenues outside of the UK.

Valuation: Innovation at a Discount

As Avon and DiscoverIE demonstrate, valuation is an important part of the opportunity. UK equities continue to trade at a meaningful discount to global peers, even though many UK-listed companies generate most of their revenues overseas and compete in the same end markets as international businesses. This gap is not just about index composition or the UK economy. It also reflects years of weak investor demand and a tendency to overlook companies listed in London, particularly in the small and mid-cap part of the market.

For investors, that matters because innovation is not always priced consistently across markets. A UK-listed company with specialist intellectual property, global customers and strong competitive positions may be valued more modestly than a similar business listed in the U.S. or Europe. Where that discount is attached to genuine quality, it can create an attractive entry point. The key is selectivity: the opportunity is not to buy the UK market simply because it looks cheap, but to identify innovative businesses where the market is failing to fully recognise the durability of growth, margins and returns.

The UK Is Not Short of Innovation—It Is Short of Investor Attention

The UK’s innovation story is hiding in plain sight. It is not always found in obvious technology names or the companies dominating global headlines, but in specialist businesses addressing real-world problems. For investors, that is what makes the opportunity interesting. UK-listed companies can offer exposure to global growth themes in a way that is often less crowded, less obvious and, in some cases, more attractively valued than international alternatives. The challenge is knowing where to look.