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Gresham House Plc

Gresham House Plc Acquisition of FIM Services Ltd

Gresham House Plc (LON:GHE), the specialist alternative asset manager, has today announced the proposed acquisition of the entire issued share capital of FIM Services Limited, 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 £25.0 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 £1.5 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 £21.0 million comprising £11.2 million in cash and £9.8 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 £4.0 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 (the “Placing Price”) to raise approximately £15.0 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 which will be launched immediately following the release of this announcement and which is expected to close no later than 4.00 p.m. (BST) today. Liberum Capital Limited 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 £1.5 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.

Taurus London acted as lead adviser to Gresham House on the Acquisition.

The Placing

• Gross proceeds of approximately £15.0 million (approximately £14.5 million net of expenses) to be raised via a proposed Placing at an issue price of 410 pence per Placing Share.

• The Placing Price of 410 pence per Placing Share represents a 1.06 per cent. premium to the 30 day VWAP of 405.69 pence.

• The Placing Shares represent, in aggregate, approximately 19.68 per cent. of the Company’s issued share capital as enlarged by the issue of the New Ordinary Shares.

• The proceeds of the Placing will, in addition to the Company’s existing cash resources of approximately £13.5 million and cash acquired from FIM of approximately £6.0 million, be used:

◦ to satisfy the cash consideration payable pursuant to the Acquisition as well as restructuring costs and fees (of up to £22.8 million);

◦ for general corporate purposes, including seeding of new products and the provision of project development capital (approximately £5.0 million);

◦ to fund future acquisitions (approximately £3.7 million); and

◦ to provide general working capital, including satisfying regulatory and restructuring capital requirements (approximately £3.0 million).

• Completion of the Placing will be conditional upon, inter alia, the approval by Shareholders at the General Meeting of the Resolutions and Admission occurring, details of which are set out below.

Anthony Dalwood, Gresham House Plc CEO commented: “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 commented: “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.”

The Accelerated Book Build

The Placing is being conducted by way of an Accelerated Book Build led by Liberum Capital as sole bookrunner.

Completion of the Placing will be conditional upon, inter alia, the approval by Shareholders at the General Meeting of the Resolutions and Admission occurring.

Accordingly, the Company expects to publish a circular (the “Circular”) in due course following the successful closure of the Accelerated Book Build, in order to convene the General Meeting to approve certain matters necessary to implement the Placing and the Acquisition (the “Resolutions”).

The Company has today entered into the Placing Agreement with Liberum Capital which contains customary terms and conditions, described in more detail below. Pursuant to the Placing Agreement, Liberum Capital has conditionally agreed, as agent for the Company, to use its reasonable endeavours to procure Placees for the Placing Shares at the Placing Price.

Your attention is drawn to the detailed terms and conditions of the Placing described in the Appendix to this Announcement (which forms part of this Announcement).

The book for the Accelerated Book Build will open with immediate effect. The book is expected to close no later than 4.00 p.m. (BST) today. The timing of the closing of the book and the making of allocations may be accelerated or delayed at Liberum Capital’s sole discretion. The Appendix to this Announcement contains the detailed terms and conditions of the Placing and the basis on which investors may participate in the Accelerated Book Build. The Placing is not being underwritten by Liberum Capital. Details of the number of Placing Shares conditionally placed with institutional and other investors pursuant to the Placing and gross proceeds will be announced as soon as practicable after the close of the Accelerated Book Build.

Qualifying investors who are invited, and who choose, to participate in the Accelerated Book Build by making an oral and legally binding offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety, including the Appendix, and to be making such offer on the terms and subject to the conditions contained herein and to be making the representations, warranties, undertakings and acknowledgements contained in the Appendix to this Announcement.

The Placing Shares will be issued credited as fully paid and will rank pari passu with the existing ordinary shares in the capital of the Company (the “Ordinary Shares”), including the right to receive all dividends and other distributions (if any) declared, made or paid on or in respect of such shares after the date of their issue.

Circular and Notice of General Meeting

The Company expects to publish the Circular in connection with the Placing and the Acquisition in due course, which will contain a notice convening the General Meeting in order to approve certain matters necessary to implement the Placing and the Acquisition. A copy of the Circular will be made available on the Company’s website at www.greshamhouse.com.

The General Meeting is expected to be convened for 11.00 a.m. on 21 May 2018 and will take place at the offices of the Company’s solicitors, Eversheds Sutherland (International) LLP at One Wood Street, London EC2V 7WS. The actions that Shareholders should take to vote on the Resolutions will be set out in the Circular, along with the recommendation of the board of directors of the Company (the “Directors”).

Admission

Application will be made for the New Ordinary Shares to be admitted to trading on AIM and it is expected that Admission will become effective and trading will commence in the Placing Shares at 8.00 a.m. on 22 May 2018.

Further details of the Placing and the Acquisition can be found below.

Defined terms used in this Announcement will have the meaning (unless the context otherwise requires) as set out in this Announcement and in the Circular to be posted to Shareholders in due course, which will be available on the Company’s website www.greshamhouse.com.

This announcement is released by Gresham House Plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (“MAR”), encompassing information relating to, inter alia, the proposed Placing to raise approximately £15.0 million and the acquisition of FIM Services Ltd, a specialist manager in real assets investments described above, and is disclosed in accordance with the Company’s obligations under Article 17 of MAR.