Gresham House Plc (LON:GHE), the specialist asset manager, has today announced that it has entered into exclusivity arrangements and conditional heads of terms (the “Agreement”) to acquire Hazel Capital LLP (“Hazel Capital”), a leading UK asset manager of new energy infrastructure.
The proposed acquisition, expected to complete in the third quarter of this year, is in line with Gresham House’s strategy to grow both organically and through acquisition, and is highly complementary to Gresham House’s existing Real Assets division and the objectives of the recently announced British Strategic Investment Fund. The acquisition is intended to be funded using shares issued at a premium to the current share price, plus a deferred earn out in cash and shares. Gresham House has been granted a period of exclusivity until 31 December 2017 to finalise its due diligence and the terms of the proposed acquisition.
Hazel Capital advises on more than £100 million of assets with a product portfolio including Venture Capital Trusts (“VCT”) and Enterprise Investment Schemes (“EIS”) designed to generate attractive yields with downside protection provided by strong real asset backing. The Hazel Renewable Energy VCTs launched in 2010 have achieved market leading performance, with net returns of over 50% before any tax benefit considerations.
In conjunction with the Agreement and following ongoing due diligence, Gresham House has agreed to provide growth capital in the form of a secured loan (“the Loan”) to Hazel Capital during the exclusivity period for up to £4.6 million, including arrangement fees, to develop its immediate pipeline of Energy Storage System (“ESS”) projects. The Loan accrues interest in-line with Gresham House’s criteria and is secured against Hazel Capital. Full repayment is due on or before 31 December 2017.
Further announcements will be made as appropriate in due course.
Tony Dalwood, CEO of Gresham House Plc, said: “We see a substantial growth opportunity in renewables and new energy infrastructure-related assets and today’s announcement is the first step towards bringing a recognised expert investor in this growing sector into our Group. Hazel Capital’s success in generating market leading returns through its VCT and EIS platform within the growth areas of infrastructure related asset management, fits well with our strategy to develop our range of alternative and illiquid investment solutions for long term investors.”
Ben Guest, Managing Partner of Hazel Capital, said: “In Gresham House, the Hazel Capital team has found an exciting new home to realise its future growth potential in the new energy and infrastructure markets. The complementary skills, entrepreneurial drive and overlapping investment philosophy ensures an excellent fit. We are very excited about our future as part of Gresham House.”