Gresham House is to acquire the entire issued share capital of FIM Services Limited (FIM), an alternative investment fund manager specialising in UK real assets, specifically sustainable forestry and renewable energy investments, by its wholly-owned subsidiary, Gresham House Holdings Limited (GHH), for a total consideration of up to GBP25.0 million on a cash-free, debt-free basis – subject to certain adjustments.
The acquisition combines two leading firms in UK commercial forestry management and renewables, adding both assets under management (AUM) and in-house investment expertise to Gresham House Forestry and Gresham House New Energy. Upon completion, Gresham House’s AUM will be over GBP1.5 billion across five specialist alternative investment strategies: forestry, new energy, UK housing and infrastructure, private assets and strategic public equity.
On completion, Gresham House will pay an initial consideration of GBP21.0 million comprising GBP11.2 million in cash and GBP9.8 million in loan notes (such loan notes to be exchanged for new ordinary shares in Gresham House) (the “Consideration Shares”). Further deferred consideration of up to GBP4.0 million will be payable by the Company, subject to the satisfaction of certain performance targets being met over a two year period post-Completion.
The acquisition of FIM is expected by Gresham House’s Directors to provide financial returns which exceed its 15 per cent return on capital hurdle in the short-medium term alongside material earnings enhancement before identified synergies. The historic acquisition multiple is 6.2x EBITDA, rising to 7.4x with full deferred payments, thereby accelerating the Company’s profitable growth and increasing the potential to pay dividends.
In addition, Gresham House is pleased to announce the proposed conditional placing of new ordinary shares in the company at a price of 410 pence per Placing Share to raise approximately GBP15.0 million (before expenses). The proceeds of the placing will be used to satisfy, in part, the cash consideration payable pursuant to the acquisition.
Anthony Dalwood, Gresham House CEO says: “The acquisition of FIM will allow Gresham House to achieve scale and establish a market leading position as an investor in UK commercial forestry whilst also enhancing the Gresham House New Energy division. Over the last three years, we have rapidly established Gresham House as a platform for growth for specialist asset management teams. The strategic rationale, alongside the potential financial returns, are clear and exciting for Gresham House shareholders.”
Richard Crosbie Dawson, Managing Director of FIM, says: “Gresham House is the ideal home for FIM’s next stage of growth. Tony and his team have a proven track record in successfully integrating businesses and our own integration planning is already underway. We have a complementary client base to Gresham House and our combined expertise and experience will facilitate new investment opportunities. We are excited about what the future holds.”
