Boutique asset management business Gresham House is eyeing distribution opportunities as it enters into a joint venture with Aberdeen Standard Investments, focused on UK small-cap strategies run by Graham Bird (pictured) and Tony Dalwood, in a move described as an “elegant solution” to let a funds giant access smaller-sized investment opportunities.
The pair’s alternatives strategy currently takes a private equity approach to private and listed small-caps via the £600m Gresham strategy public equity platform.
The Aberdeen Standard deal covers the Gresham House Strategic Public Equity LP, which is no longer open to new investment according to the company website, and the £44.4m Gresham House Strategic investment trust, which sits in the UK Small Companies sector.
The 50:50 joint venture would direct flows to the existing strategies, including the investment trust, and also see the launch of another fund, a press statement said.
Gresham House operates at the smaller end of the market in areas Aberdeen Standard may not be able to access because of its size, said Tilney managing director Jason Hollands. “This partnership seems an elegant way of bringing together the backing of a substantial institution, with a specialist asset management capability,” Hollands told Portfolio Adviser.
The UK Micro Cap and Multi Cap Income funds, managed by Ken Wotton, and the Baronsmead VCTs, acquired from Livingbridge in November, which also sit within the strategic public equity platform, are not involved in the joint venture.
Mifid II drives small-cap opportunities
Gresham House said Mifid II has led to the small-cap space becoming particularly unloved and ignored with fewer analysts covering companies under £300m in value. The leads to depressed share prices and reduced liquidity, the fund house said.
Aberdeen Standard will take a 5% stake in Gresham House as part of the joint venture.
Dalwood said: “Like us, Aberdeen Standard Investments understands the importance of small cap stocks and of specialist alternative investment strategies. This joint venture offers Gresham House access to a powerful distribution network and an industry-leading product development capability. The Strategic Public Equity investment approach is something I have been involved with since 2003 and we are thrilled to have ASI as a new shareholder in the process.”
In terms of the investment trust, chairman David Potter said it would benefit from an increased profile under the joint venture plus increased resources and distribution capabilities. The closed-ended fund, which is currently trading at a 24.4% discount, will shift its investment management agreement from Gresham House to the joint venture.
