Gresham House Q&A: Focussing on existing asset classes to add a lot of value (LON:GHE)

Gresham House plc (LON:GHE) Chief Executive Officer Tony Dalwood caught up with DirectorsTalk for an exclusive interview to discuss the increase in Assets under Management, their five-year plan GH25, maintaining momentum, ESG and the investment strategy going forward.

Q1: H1 results just out and your Assets under Management has increased during a challenging economic period. What has driven this growth?

A1: It’s been across the piece this growth and we are very pleased that all of our platforms have managed to grow.

Particular notable areas be it within sustainable infrastructure where we had a final close on British Strategic Investment Fund at £300 million, we’ve also won some mandates in Strategic Public Equity, the investment trust SEC or Strategic Equity Capital is notable as well. In addition to that, forestry and housing and new energy with grid at the batter storage funds, all growing, all doing well.

So, we’re really pleased on a number of fronts.

Q2: How do the latest results measure up in context of your five-year plan GH25?

A2: Back in March, we set out the five-year plan GH25 which has two aspects to it, one was financial goals and two was strategic goals.

Financially, we’re aiming to double shareholder value through doubling of Assets under Management, aiming for 40% EBITDA margins and generating a 15% return on capital from our balance sheet.

Strategically, we’re looking to be leaders in ESG – Environmental, Social and Governance – areas and we’ve invested heavily in that area with a Director of Sustainable Investment, Rebecca Craddock-Taylor.

In addition to that, we wanted to maintain our performance within our vehicles, we’re very fortunate we’ve done that across almost all of our vehicles actually which is highly unusual. We also want to maintain significant market share within our products for example, we have 30-odd percent share in battery storage in the UK and a 20-odd percent market share in commercial asset management for forestry. We want to also build on our international presence where in Ireland we made a stride into forestry last year.

Elsewhere, we want to continue enhancing the brand value we’ve got at Gresham House and the goodwill’s been generated by the types of asset classes we’re in.

Q3: How do you plan to maintain this momentum?

A3: If you look at the asset allocation increases for investors at the moment, so much of it is going to alternatives and away from traditional equities ; bonds, property, cash, the fact that bond yields are so low, the alternatives are very attractive relatively speaking.

Our areas of infrastructure, wind, solar, battery storage in addition to forestry and social housing, these are areas that can provide yield and long-term significant superior performance to what you should expect from bonds but also, from what we believe, from traditional equities.

Q4: How important is ESG and sustainability to the company’s business?

A4: Increasingly, this is an area which we are well positioned for. Investors are demanding more environmental, social, governance characteristics within their product, we’re very fortunate that we don’t have to work too hard to show that we already have those principals embedded in our process and asset classes.

We’ve got more work to do, we’ve got more work to show the types of data the clients are after, the fact for example we planted 8 million trees last year which can be used to offset carbon emissions on the journey to zero carbon, for almost the whole of Newcastle those trees would be equivalent to.

We’re a long way from getting to the end result but we’re certainly in a good place.

Q5: How has COVID-19 affected your business?

A5: Fortunately, we made a decent transition to working from home during the lockdown.

Technology allowed us to be able to overcommunicate, culturally we were encouraging people to communicate, overcommunicate, have new ways of working routines so daily unit discussions as required, group townhalls were weekly and then we had unit leader head meetings once or twice a week.

Some of these things didn’t exist to that extent previously so it was quite a transition but one which was made seamlessly.

As we go now, with lockdown slightly eased, we’re actively encouraging people, within the guidelines, to come back to work particularly once or twice a week within their units in order to start working together, creating new business development opportunities.

We’re very much on the forward thinking of ambition to try and get back to normality as soon as possible.

Q6: Do you plan to add to your investment strategies?

A6: Gresham House’s focus is on growing the existing platforms and strategies, each one of the areas can be scale; venture capital trust, public equity, forestry, renewables, our sustainable infrastructure, and housing. All of those areas have the capacity and the people capability to grow organically.

We will add some acquisitions as appropriate as we have done previously but the focus is very much on our existing asset classes and we think we can add a lot of value over the next few years, just from those alone.

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