Gresham House plc (LON:GHE) Chief Executive Officer Anthony Dalwood caught up with DirectorsTalk for an exclusive interview to discuss their acquisition of Hazel Capital
Q1: Gresham House this week have acquired Hazel Capital, a leading UK asset manager of new energy infrastructure including solar, wind and battery storage. What does this mean for you and what opportunities has this created?
A1: It’s good news. We’ve been working on this with the team over at Hazel for quite a while now and we’ve got to know them in many ways so good news about the fit I think, which is unique exciting opportunity. Directly, for GHE, there’s an immediate increase in assets under management which is always good for an asset management business and it also increases the product diversification. Immediately, we now manage or advise bench capital trusts, we’ve got a diversification of asset class into renewables and new energy infrastructure and importantly, it also adds to our quality people within Gresham House, that’s something that over time will always add value to both clients and to shareholders so that’s the critical element of this transaction as well.
Q2: How does the newly-created division, Gresham House New Energy, further strengthen Gresham’s alternative assets offering?
A2: We’ve got a number of other areas already under our belt; forestry, private equity, strategic public equity and more recently infrastructure housing, so you can see Gresham House is now diversifying into some real illiquid with specialist asset management strategies and these clients, particularly pensions funds along with term investors, are growing their asset allocation and demand for these areas.
Renewables is clearly an area that over the last 10-15 years has come out of almost nowhere to be quite a major and significant part of the people’s asset allocation and investment allocation and hence why Hazel Capital should and will add to that demand for our products in due course. Of course, this is an area where we’re increasingly getting inbound communication from clients saying we want to talk about this, so we anticipate quite an exciting future and demand for this asset class and hopefully some products from Gresham House.
The other aspect of course is these areas generally throw off an income yield which, again, is probably another reason why people are increasingly demanding it, given the near zero interest rates we’ve had over the last few years.
Q3: So, how can investors benefit from this?
A3: We’re focused on helping clients which we believe will feed through to the shareholder return for Gresham House. The operational gearing of increasing assets under management is a well understood phenomenon and as we increase our AUM which now, when you add 100 on to the recently 550 odd million pounds that we announced, we’re increasingly incrementally adding assets under management and the operational gearing of that should feed through to profitability and accelerate our path to profitability which we indicated we’re on course to do over the short term. So, we hope, for 2018, this should just enhance our profitability within Gresham House and therefore shareholder returns.
Q4: Now, Gresham House is obviously an ambitious company with exciting growth plans, so what can we expect coming to the end of 2017?
A4: We’ll obviously be integrating Hazel Capital and its team, a very important element to make sure that they’re stable and we get some synergies out of that. We’re focussed on growing our assets under management, not just from Hazel but organically as well, so we’re anticipating some further organic growth across our other product portfolios.
Of course, we want to continue to keep clients happy so our client communications and also product performance, our investment performance from our products, is a focus for all of those involved in managing assets for clients.
So, there’s a lot to do, we are very pleased with where we are but we continue to want to work hard towards those ambitions of generating further shareholder returns and we’re pleased with where we are.
