Gresham House PLC Launch of new investment platform

Gresham House Plc

Gresham House plc (LON:GHE), the specialist asset manager, has today announced that The Royal Borough of Windsor and Maidenhead acting as the Administering Authority for The Royal County of Berkshire Pension Fund (“Berkshire”) intends to become a strategic investor in Gresham House. The Company is also announcing its intention to launch the Gresham House British Strategic Investment Fund (“BSIF” or the “Fund”) as part of an alternative investment platform to support the investment objectives of longer term institutional investors, including local government pension schemes (“LGPS”), endowments and family offices.

Highlights

The Subscription

· The board of Gresham House believes that there is an opportunity to generate sustainable, and attractive returns from illiquid investments in a cost-effective manner and has identified that:

o alternative asset management seeking superior investment returns is a structural growth area;

o the need for “patient capital” when investing in areas such as infrastructure is significant and can facilitate additional benefits of social impact and local community investment; and

o attractive alternative investments in niche asset classes are often overlooked and difficult to access by larger funds.

· Berkshire wishes to enter a long term strategic relationship with Gresham House in order to benefit from these opportunities and generate alignment with the asset manager, Gresham House Asset Management Limited (“GHAM”).

· Berkshire will conditionally subscribe for up to a maximum of 2,546,372 new Ordinary Shares (less an amount of shares equal to the number of Ordinary Shares acquired by Berkshire in the market on or prior to the date of such subscription), representing, if fully subscribed, 20 per cent. of the enlarged issued share capital of the Company.

· The Subscription will be at a price of 325 pence per Subscription Share representing a premium of 7.3 per cent. to the closing price on 20 February 2017, being the latest practicable date prior to the date of this announcement.

· The Gresham House Board believe the Subscription is consistent with the Company’s stated objectives to add long-term, supportive partners to its shareholder base.

· The Subscription is conditional upon, the passing of the Resolutions at the General Meeting, Admission occurring and, because Gresham House is the parent company of GHAM which is authorised and regulated by the FCA, the FCA having approved the Subscription to the extent that it exceeds 9.9 per cent. of the enlarged issued share capital of the Company (or the statutory period of 60 days within which the FCA must act having expired without the FCA having approved such subscription or given a warning notice that it proposes to approve it subject to conditions or that it intends to object to such subscription). The Subscription of up to 9.9 per cent. of the enlarged issued share capital of the Company is conditional only on the passing of the Resolutions at the General Meeting and Admission occurring. The Subscription is not conditional on the launch of the BSIF.

· As Berkshire intends to be a long term investor in the Company, the Subscription Shares will be subject to a 24 month “lock-in” agreement with a subsequent 12-month orderly market period.

· The Company has received written and verbal indications of support to vote (or procure the vote) in favour of the resolutions required to effect the Subscription from shareholders holding Ordinary Shares representing approximately 48.3 per cent. of the Company’s issued ordinary share capital as at 20 February 2017, being the latest practicable date prior to the publication of this announcement.

· Together with the Ordinary Shares held by Directors and senior managers of the Company who have declared their intention to vote, or procure the vote in respect of, their own beneficial shareholdings, in favour of the resolutions required to effect the Subscription, the total declarations of support for the resolutions required to effect the Subscription received by the Company amount to approximately 60.7 per cent. of the issued share capital of the Company.

Gresham House British Strategic Investment Fund

· Gresham House intends to establish a platform to provide solutions to longer term investors, addressing the demand for alternatives and illiquid assets in a cost-effective manner which will also facilitate structured co-investment.

· As part of this platform, Gresham House, through its subsidiary, GHAM, together with Berkshire as its cornerstone investor, therefore propose to establish the BSIF. It is intended that the

BSIF will:

o have a target fund size of £300 million;

o be managed by GHAM;

o focus on investment in the three themes identified by the Chancellor in the 2016 Autumn Statement as being of strategic importance to the United Kingdom, namely Innovation, Housing and Infrastructure;

o allow local government pension schemes (“LGPS”), private sector pension funds, endowments, family offices and other investors to access these opportunities; and

o provide investors with the ability to address areas of specific interest, including local investment opportunities, or social and infrastructure investment initiatives, in a more focused way, by:

§ providing them with the ability to be involved in the investment process, or to engage directly with the manager, and hence facilitate greater transparency and discretion over capital allocation; and

§ affording them discretionary co-investment rights to allow them to “top-up” their investments in preferred sectors or localities on a deal-by-deal basis.

· Initial discussions with a limited number of LGPS have confirmed interest in the objectives of the new Gresham House platform.

Further announcements relating to the BSIF are expected to be made in due course.

 

Trading Update

In addition, the Company also provides an update in respect of trading since the announcement of the Company’s interim results for the six-month period ended 30 June 2016 on 28 September 2016:

· The Company expects to announce its annual results for the financial year to 31 December 2016 on 29 March 2017. The Board is pleased to announce these are expected to be in line with expectations.

· As a result of early repayments from the purchaser of the Newton-le-Willows site sold on 23 September 2015, the Company’s borrowing facility has reduced in the period to 31 December 2016 by £0.9 million. There was a further early repayment of £0.1 million on 19 January 2017, reducing the Company’s outstanding gross borrowing to £5.9 million as at 20 February 2017, being the latest practicable date prior to the date of this announcement.

· The Company received a £0.6 million repayment of loan principal and interest from Atilla on 16 December 2016. The Company is also advancing its disposal of property assets with both the Southern Gateway site and remaining land at Newton-le-Willows entering active marketing processes.

Tony Dalwood, CEO of Gresham House Plc, comments: “Gresham House is now an established specialist asset manager with a growing reputation for providing long term investment capabilities and solutions to address clients’ demands. Today’s announcement represents a further significant step in delivering the growth strategy that we set out when repositioning the group two years ago. We welcome our new strategic shareholder in Gresham House and the long term capital investment platform we are now proposing is expected to grow our third party assets under management significantly, accelerating our path to profitability”.

John Lenton, Chairman, Berkshire Pension Fund and Pension Fund Advisory Panels, added “We are delighted to be working with Gresham House in developing investments in alternative and illiquid assets. This platform will enable us to reduce costs and obtain diversity in our investments. We will be targeting niche areas and make investments which are smaller and usually longer term than those that interest the major investment houses. These give us the potential of a higher long term return which is so important to a Pension Fund like ours which has to plan for pensions that will be drawn down many years in the future.

“We are particularly pleased to be a cornerstone investor in the Gresham House British Strategic Investment Fund and the ability it gives us to invest in themes identified by the Chancellor as being worthy of support.”

The Company has convened the General Meeting for 10.00 a.m. on 10 March 2017, which will take place at the offices of Eversheds Sutherland (International) LLP at One Wood Street, London EC2V 7WS, for the purposes of considering and, if thought fit, approving the Resolutions relating, inter alia, to the Subscription.

A circular addressed to Shareholders and Warrantholders (the “Circular”) containing further information in relation to the Subscription and the BSIF, as well as the Notice of the General Meeting and details of the Resolutions, will be posted today and will also be made available on the Company’s website at www.greshamhouse.com.

Further information in relation to the Subscription, the BSIF and the General Meeting is set out in Appendix 1 to this announcement. Definitions for capitalised terms and expressions used in this announcement and not defined in the text are set out in Appendix 2 to this announcement.

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