Gresham House is set to be taken over by US firm Searchlight Capital Partners in a £469.8m deal.
The alternatives focused asset manager revealed an £11.05 per share offer had been tabled in a stock exchange announcement this morning (17 July).
The offer has been recommended for acceptance by the Gresham board. It represents a 63% premium to the undisturbed share price of £6.80.
The terms imply a valuation multiple of approximately 15.9 times Gresham House’s earnings for the year ending on 31 December 2022.
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Searchlight said it has received irrevocable undertakings to accept the deal from Gresham’s directors and some of its management team.
It also has letters of intent to accept from Gresham shareholders with a total stake of 4.9%, taking the total proportion of shares it is already on track to acquire to 33%.
Shares in Gresham jumped 55% at the market open to reflect the valuation Searchlight has put on the business.
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Gresham House has £8bn in assets under management split across public and private equity funds, real assets strategies and real estate. Fund managers at the firm include Ken Wotton (pictured left above alongside investment director Brendan Gulston), who heads up the LF Gresham House UK Micro Cap, UK Multi Cap Income and UK Smaller Companies funds, as well as the Strategic Equity Capital investment trust.
Searchlight is a private equity firm founded in 2010 and has over $11.6bn (£8.9bn) of assets under management including a $3.4bn third private equity fund. It has completed 40 private equity transactions across the media, communication, business services and financial services sectors.
In the deal announcement, Searchlight said it had been attracted by Gresham House’s position as “one of the UK’s leading asset managers in sustainable alternative asset classes”.
Anthony Townsend, chair of Gresham House, commented: “Since the management buy-in in 2014, Gresham House has been transformed into a leading specialist alternative asset manager. Today’s offer delivers shareholders a 4x return over this period.
“The Gresham House Board believes that it represents a compelling opportunity in the current challenging economic environment for shareholders to realise, with certainty, Gresham House’s potential for long-term future value creation.
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“The acquisition by Searchlight starts a new and exciting chapter for Gresham House. We are confident that Searchlight will accelerate our international and domestic growth strategy and their long-term capital and global expertise will support and enhance our investment teams’ ability to deliver returns to clients.”
Nicholas Hyett, investment manager at Wealth Club, commented: “The acquisition of the UK’s largest forestry investment manager, and second largest VCT manager, is a big vote of confidence in the UK’s alternative investment industry.
“As a booming alternative asset manager, Gresham has been an important driver of capital behind major government initiatives to decarbonise the economy and spur innovation through investment in start-ups. Those investment categories have struggled a bit in a rising interest rate environment, but Searchlight clearly sees the long-term potential.
“In fact, ‘opportunistic acquisition of a temporarily out of favour investment’ sums up this deal all over.”
