London-based asset manager Gresham House has been acquired by private equity firm Searchlight Capital in a cash transaction totaling nearly £470 million. Gresham House, which currently oversees £8 billion in investor funds, focuses on investing in alternative assets such as battery storage, forestry, energy from waste, and vertical farming.
Shareholders of Gresham House will receive £11.05 per share, representing a final offer price that values the company at £440.6 million. The deal is seen as attractive, and Gresham House’s board of directors intends to unanimously recommend it to shareholders in upcoming meetings.
Following the announcement, Gresham House’s shares experienced a significant surge, rising by nearly 56% to reach £10.58 during morning trading on Monday. Over the past year, however, the company’s shares had declined by around 20% due to a broader sell-off in the UK’s smaller and mid-sized firms. Despite this, Gresham House reported positive financial results, including increasing revenues and a 20% growth in assets under management, reaching £7.8 billion in the last full-year report for 2022.
Gresham House’s achievement of managing £8 billion in assets within a two-year timeframe exceeded its CEO Tony Dalwood’s initial goal of doubling the company’s assets under management by 2025. In response, Dalwood raised the target to £8 billion, which has now been successfully accomplished. This rapid growth attracted Searchlight Capital, with the acquisition being viewed as an opportunistic move to acquire an undervalued investment.
Nicholas Hyett, an investment manager at Wealth Club, described Searchlight’s acquisition as a significant endorsement of the UK’s alternative investment industry. Gresham House, as a prominent alternative asset manager, has played a pivotal role in supporting government initiatives aimed at decarbonizing the economy and promoting innovation through investments in startups. Although these investment categories have faced challenges in a rising interest rate environment, Searchlight recognizes the long-term potential and value in Gresham House’s business model.
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