Our 2026 capital allocation framework

How capital moves between sectors, holdings and new opportunities inside a diversified portfolio.

Every unit of capital the group generates competes for the same four uses: reinvestment inside an existing holding, acquisition of a new platform, strengthening the balance sheet, or holding it in reserve. The framework exists so that comparison is made deliberately rather than by whichever opportunity arrives first.

Reinvestment inside a holding has priority where the return is understood and the operating team has capacity to execute. We already know the business, the incremental capital carries no acquisition premium, and the payback is usually the shortest available to us. Most of our capital goes here in an ordinary year.

New platforms must clear a higher bar. They are underwritten on mid-cycle earnings, must be operationally intelligible to us, and must not duplicate a driver we are already heavily exposed to. Adding a fifth business dependent on the same end market is concentration, not diversification, however attractive the individual asset appears.

Balance sheet strength is treated as a use of capital rather than a residual. Carrying moderate leverage and undrawn capacity is what allows the group to act during periods when financing is scarce, and those periods are when the best assets change hands.

Holding capital in reserve is a legitimate outcome. When nothing clears the bar, we wait. The framework is designed to make waiting a decision we can explain rather than an admission that we found nothing to do.

Comparison requires looking beyond a headline return. Two projects with similar expected earnings may have very different maintenance requirements, execution risks and cash-flow timing. We consider how much additional working capital is needed, how quickly invested cash can return and what remains if the original assumptions prove too optimistic. That makes the discussion about the quality of the opportunity rather than the precision of a forecast.

Allocation is also a continuing process rather than a once-a-year exercise. As operating conditions change, an existing commitment may require more attention and a previously attractive opportunity may no longer justify its cost. Reviewing actual outcomes against the original investment case helps identify whether a shortfall reflects timing, execution or a more fundamental weakness, and informs the next decision.

The framework describes an approach, not a fixed sector quota or a promise of returns. Its purpose is to preserve room to act, direct resources toward opportunities that can be understood and executed, and keep the long-term strength of the portfolio ahead of the pressure to deploy capital. This article is a general discussion of capital allocation and is not investment advice or an offer to buy or sell securities.