Gresham House plc (LON:GHE), the specialist alternative asset manager, has today announced that Gresham House Asset Management has been appointed as the investment manager and Alternative Investment Fund Manager (“AIFM”) of Strategic Equity Capital plc .
On completion of Gresham House’s proposed joint venture with Aberdeen Standard Investments (“ASI”,) Aberdeen Standard Gresham House Investment Management Limited (“Aberdeen Standard Gresham House”), a company to be jointly owned by Gresham House and ASI will ultimately become, subject to regulatory and other approvals, SEC’s investment manager and AIFM.
SEC was launched by SVG Investment Managers Limited (“SVGIM”) in 2005 with a distinctive investment strategy to apply private equity techniques to public equities. At the time of its launch, SVGIM was led by Gresham House CEO Anthony (Tony) Dalwood, supported by a broad private equity platform.
Gresham House’s joint venture with ASI, acting through Aberdeen Asset Management plc, was announced in March 2019. Gresham House was selected by ASI as a joint venture partner on the basis of its long, successful track record investing in the strategic public equity space. The intention of the joint venture is to grow the strategic public equity (“SPE”) platform and opportunity. This specialist philosophy to investing involves a highly engaged approach using private equity techniques to investment in smaller public companies.
For Gresham House, the joint venture represents an opportunity to focus on its core investment process while ASI’s responsibility will be to bring its strong investment company sales and marketing capabilities to increase assets under management. The appointment of GHAM and ultimately Aberdeen Standard Gresham House, has the following key benefits:
· A strong and well-established platform (£3bn AUM as at March 2020) with a strong net cash balance sheet and well-developed operational resources. It has an established pedigree of investing on a strategic public equity (‘SPE’) basis in UK equity markets, which has been recognised by Aberdeen Standard Investments.
· A team-based capability led by Tony Dalwood, based on his 20 years of investment experience in the strategy, including the period of time when he led SVGIM. Since 2015, this strategy has been deployed by Gresham House. The SEC investment process will follow the Gresham House SPE investment process.
· An Investment Committee with broad experience across the industry, comprising, Tony Dalwood (Chair of the Investment Committee), Peter McKellar (ASI’s Global Head of Private Markets) following completion of the joint venture, Richard Staveley (Managing Director of SPE at Gresham House), Ken Wotton (Managing Director of Public Equities, Gresham House) and three external members (Tom Teichman, Bruce Carnegie-Brown and Graham Bird).
· The strong investment company sales and marketing capabilities of ASI, which will be leveraged through the joint venture. ASI manages 24 investment companies, with aggregate total assets of £10.3bn as at 29 February 2020, which all benefit from a dedicated investment company sales and marketing capability
· Gresham House and funds managed by ASI intend through reasonable endeavours to acquire a significant number of shares in the Company through the secondary market over the medium-term following the appointment of Aberdeen Standard Gresham House as the new Investment Manager.
Commenting, Tony Dalwood, Gresham House’s Chief Executive & Chairman of the SPE Investment Committee, said:
“We are delighted to be appointed investment manager of Strategic Equity Capital plc working together with Aberdeen Standard Investments. We have complementary skills in our strategic public equity (“SPE”) approach to smaller companies investment and our shared expertise will create long-term shareholder value for Strategic Equity Capital. We look forward to working with the SEC Board to manage the existing portfolio and to strengthening the investment process to ensure its long-term success.”
Richard Hills, Chairman of SEC, said:
“Following a detailed review, initiated at the end of last year, the Board of Strategic Equity Capital is pleased to announce that it has signed heads of terms to appoint a new investment manager. Notwithstanding that we are in the midst of extreme market turbulence, we believe that the change is beneficial for shareholders. Indeed, we believe that Aberdeen Standard Gresham House has the experience, the platform and the associated investment management infrastructure to enhance the delivery and marketability of our investment strategy in these challenging times.”
Peter McKellar, Global Head of Private Markets of Aberdeen Standard Investments, commented:
“We are delighted that the Board of Strategic Equity Capital plc will be appointing Aberdeen Standard Gresham House as its new Investment Manager. We selected Gresham House as our joint venture partner in recognition of their deep and specialist expertise in this strategy and ability to identify compelling opportunities and generate attractive returns.”
The incumbent SEC management team of Jeff Harris and Adam Khanbhai will transfer to the new manager team and be part of the SPE team reporting to the SPE Investment Committee chaired by Tony Dalwood.
The joint venture will be based on the Gresham House platform and continue to benefit from the connectivity to other equity investment teams and the full investment management infrastructure of the business.
The appointment is contingent on obtaining AIFM approval, expected to be achieved within Q2, and the execution of the new IMA. The appointment of Aberdeen Standard Gresham House as Investment Manager is expected to become effective in Q2 2020.