Currys’ largest shareholder Redwheel has supported the board’s decision to reject an initial offer from Elliott Advisors and said the offer “highlighted a wider problem with the UK equity market”.

It emerged over the weekend that Elliott Advisors, which owns Waterstones, had proposed an initial takeover bid of Currys but this was soon rejected after the electricals retailer said it “significantly undervalued the company and its future prospects”.

In a statement, co-head of the UK value and income team at Redwheel, Ian Lance, said the bid for Currys demonstrates a wider problem, as the UK equity market is losing out to rivals in the US.

Lance said: “[This] highlights a wider problem with the UK equity market, which no longer seems to fulfil its primary purpose of price discovery and efficient capital allocation. 

“Some of the largest market participants in the UK have been allocating away from UK equities, which are close to all-time low valuations, and therefore should have the potential to offer attractive returns. 

“Instead, investors are allocating to US equities, at close to all-time high valuations, a level that has historically been associated with poor returns.

He said this has resulted in “pockets of the UK equity market being valued significantly below the true value of the businesses”. 

He added that it is “likely” that overseas corporate buyers will “take advantage of depressed valuations of UK equities” with ownership falling into “foreign hands”, and that the number of quoted UK businesses will continue to decline unless there is a change.

Redwheel owns a 15% stake in Currys, while Mike Ashley’s Frasers owns 11%, and it is understood that both could be crucial players in a potential bidding war for the retailer.

Chinese ecommerce giant has also been in “the very preliminary stages of evaluating a possible transaction”.

Both Elliott and are yet to make a formal offer and have until March 16 and March 18 respectively to do so.