Gresham House Acquisition of FIM Services Ltd, a specialist manager in real assets investments

Gresham House LON:GHE, the specialist alternative asset manager, this morning  announced the proposed acquisition of 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, for a total consideration of up to GBP25.0 million on a cash-free, debt-free basis.

The Acquisition combines two leading firms in UK commercial forestry management and renewables, adding both assets under management 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). 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.

Gresham House has a robust investment process when appraising balance sheet investments. The acquisition of FIM is expected by the 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 (the “Placing Shares”) at a price of 410 pence per Placing Share to raise approximately GBP15.0 million (before expenses) (the “Placing”). The proceeds of the Placing will be used to satisfy, in part, the cash consideration payable pursuant to the Acquisition.

The Placing is being conducted through an accelerated book building process (the “Accelerated Book Build”) which will be launched immediately following the release of this announcement (the “Announcement”) and which is expected to close no later than 4.00 p.m. (BST) today. Liberum Capital Limited (“Liberum Capital”) is acting as financial adviser, nominated adviser, broker and sole bookrunner in relation to the Placing. The Placing is not being underwritten.

Highlights

The Acquisition

 
 --              The Acquisition combines two leading firms in UK commercial forestry 
                  management and renewables, adding both AUM and in-house investment 
                  expertise to Gresham House Forestry and Gresham House New Energy. 
 
 --              Upon completion of the Acquisition, 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. 
 
 --              The Acquisition should accelerate the Group's (as enlarged 
                  by the Acquisition) profitability growth and increase 
                  the potential to pay dividends.
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