Gresham House plc (LON:GHE), the specialist alternative asset manager, has announced the acquisition of Appian Asset Management Ltd for an initial consideration of €4.55 million, with €3.6 million payable on completion (€2.7 million in cash from existing resources of the Group and €0.9 million in new shares issued by the Company) and including €0.95 million for cash within the business. Further variable deferred consideration is payable subject to targeted earnings performance up to 31 December 2023, bringing potential total consideration to €10.0 million. The transaction is subject to approval from the Central Bank of Ireland.
Based in the Republic of Ireland, Appian is an active asset manager with c. €330 million in Assets Under Management (AUM) as at 30 September 2020 with €0.4 million normalised EBITDA for the year to 30 November 2020. The firm manages a range of funds which invest globally across traditional and alternative asset classes including equities, property, infrastructure, and forestry. The Appian Burlington Property Fund won the annual MSCI UK and Europe Property Investment Awards for Ireland in 2020.
Appian’s funds will complement those offered by Gresham House, with a planned social housing fund in Ireland complementary to Gresham House’s Residential Secure Income LP fund to be launched in 2021, targeting the shared ownership housing market and aiming to unlock a supply of more affordable houses.
Key highlights of the acquisition:
· Accelerates Gresham House’s growth plans as set out in its five-year strategy GH25 through the creation of a formal international presence in Ireland
· Establishes the Group’s offering in Europe through a regulated EU-based entity within the Eurozone
· Enhances the Group’s capabilities to develop existing strategies in Ireland and Europe with a particular focus on targeting sustainable infrastructure, social housing, and forestry
· Group pro forma AUM expected to increase to £3.6 billion upon completion (from £3.3 billion as at 30 June 2020)
· Earnings enhancing for the Group plus potential further value creation through synergies and identified growth initiatives
· Strengthens Appian’s potential client proposition with value-add client reporting and improved digital client service, marketing and distribution, alongside a broader range of alternative investment opportunities
Structured integration plan:
· To allow clients the full benefits of the combined strengths of the businesses, Appian will be fully integrated within Gresham House’s platform and will operate under the Gresham House brand as Gresham House Ireland
· Patrick Lawless, CEO of Appian, will remain as Managing Director of Gresham House Ireland and join the Board of Gresham House Asset Management, and will maintain the important network around Appian Asset Management
Further details of the acquisition
The Company expects the Acquisition to exceed its medium-term ROIC target of 15% and expects to benefit from cost synergies with the integration of the Appian business.
The Company has agreed to acquire 100 per cent of the share capital of Appian Asset Management Limited through its subsidiary Gresham House Holdings Limited and is subject to the satisfaction of certain conditions and approval from the Central Bank of Ireland.
Patrick Lawless, Chief Executive of Appian Asset Management Limited said:
“This is the start of an exciting new chapter for Appian and I am confident that our shared values and complementary capabilities will drive further opportunities for growth and expansion.
As part of Gresham House, I believe that we will be able to provide new and existing clients with exciting new investment opportunities and enhancements to our online client service offering. We look forward to creating a market leading business together.”
Commenting on the acquisition, Anthony Dalwood, Chief Executive of Gresham House said:
“The opportunity to build Gresham House further internationally, through establishing a regulated platform in Ireland, will allow us to grow our specialist asset management capabilities both in Ireland and the EU.
“Appian, and its ambitions to increase its presence in alternative asset classes, will be complementary to our existing forestry portfolio and growth strategy in Ireland.
“I am excited about working with Patrick, his talented team and extensive network, bringing the Gresham House strategies to the Appian client base alongside other Irish and European institutional investors.”