TIDMGHE
RNS Number : 6729T
Gresham House PLC
21 July 2015
Gresham House plc (AIM: GHE)
21 July 2015
Award of Investment Advisory Agreement and Trading Update
-- Award of first Investment Advisory Agreement - Strategic Public Equity mandate
-- Significant Investment for Gresham House
-- Pre-close Trading Statement for six month period ended 30 June 2015
Gresham House plc ("Gresham House" or the "Company") today
announces, alongside a pre-close trading statement, that it has
been conditionally awarded its first investment advisory mandate
for SPARK Ventures Plc (AIM: SPK "SPARK") to be led by its
Strategic Public Equity ("SPE") investment team.
The Company also intends to make a significant investment in
SPARK to support the new investment mandate.
-- Investment Advisory Agreement for SPE mandate
The new management team has been active in pursuing both organic
and acquisition opportunities for developing the Company's
specialist asset management business and is pleased to announce
that it has conditionally secured its first investment advisory
agreement with SPARK.
SPARK, the investor in early stage digital information and
technology companies, has today announced that it is proposing,
subject to shareholder approval, to change its investing policy to
pursue a new SPE investment strategy in partnership with Gresham
House.
It is proposed that Gresham House Asset Management Ltd ("GHAM"),
the Company's specialist asset management subsidiary, will be
appointed investment adviser to Sapia Partners LLP who will act as
investment manager to SPARK until GHAM receives regulatory approval
from the Financial Conduct Authority, whereupon GHAM will become
the investment manager to SPARK.
Under the Investment Management Agreement, GHAM will receive
initially as adviser and then as manager (when regulatory approval
is received), a fee of 0.125% per month of the net asset value of
the SPARK portfolio. The initial portfolio value will be
approximately GBP38.6 million. In addition, GHAM will be entitled
to a performance fee of 15% of the increase in net asset value per
share of SPARK over a 7% hurdle rate.
The assets will be managed within GHAM's SPE team, led by Graham
Bird and Tony Dalwood, which targets superior long-term investment
returns through applying private equity techniques to investing in
public markets.
Gresham's appointment will replace SPARK's existing investment
management relationship with SPARK Venture Management Holdings Ltd
("SVMH"). Tom Teichman, Chairman of SVMH will join the SPARK SPE
investment committee.
-- Significant Investment
SPARK is undertaking a fund raising to increase its assets under
management ("AUM") by a further GBP13.8m, alongside an open offer
to shareholders.
In line with its New Investing Policy, as defined and set out in
the Company's Admission Document dated 8 October 2014, Gresham
House intends to make an investment of GBP5 million in SPARK and
swap its entire 10.6% shareholding in SpaceandPeople plc for new
shares in SPARK. The Company therefore intends to invest a total of
GBP6.4m in SPARK and will hold approximately 19.4% of SPARK's
resultant issued share capital, before the open offer entitlements.
Following completion of this transaction, the New Investing Policy
will continue to apply.
Certain SPARK shareholders have also agreed to inject a limited
number of selective shareholdings into the enlarged SPARK,
comprising shareholdings in companies which have characteristics
that have historically generated strong returns, including
potentially supporting management in shareholder value creating
strategies.
In addition, the Gresham House management, SPE investment team
and investment committee, including Michael Phillips, Tony Dalwood,
Graham Bird, Rupert Robinson and Bruce Carnegie-Brown are
personally participating in the placing.
The Gresham House SPE investment team has the ability to invest
a limited amount in private equity. Gresham House has agreed heads
of terms with SVMH with the intention to acquire a majority stake
in the business with a view to retaining access to SVMH's venture
capital expertise.
SPARK has received irrevocable undertakings or letters of
support to vote in favour of the proposals at its forthcoming
General Meeting representing 44% of SPARK's total voting
rights.
-- Overview of SPARK
SPARK is an AIM-quoted investing company which, following
completion of its fund raising, is expected to have an AUM of
approximately GBP38.6m. SPARK's largest investment is its holding
in IMImobile plc, valued at approximately GBP17.3m, with the
remaining current assets being predominantly cash.
Anthony Dalwood, Chief Executive of Gresham House commented:
"Securing our first investment mandate is an important step for
Gresham House as we deliver on our plans to develop as a specialist
asset manager of differentiated and illiquid alternative investment
strategies. SPARK provides an ideal platform for us to execute our
Strategic Public Equity investment strategy. The SPARK board is
supportive of our plan to deploy the initial capital raised and
staged approach to scaling the company. The positive feedback from
the narrow group of investors we have seen recently is extremely
encouraging and we believe there will be strong interest from
Family Offices and Private Wealth Managers in addition to
institutions.
"Gresham House employs a merchant banking ethos and intends to
actively invest, alongside our clients, in funds where it has an
investment mandate. The Company's proposed investment in SPARK
represents a significant commitment to the SPE strategy."
Graham Bird, Head of Strategic Investments at Gresham House plc
added
"Once we commence the investment advisory agreement, we will
advise and then manage the assets of SPARK in accordance with the
SPE mandate that Tony Dalwood and I successfully developed at SVGIM
- in essence applying private equity techniques and approach to
investing in public markets. SPARK is the first fund that our SPE
investment team will manage and we will target superior returns by
focusing on inefficient areas of the market, taking block stakes in
smaller companies and constructively engaging to identify and
support significant value creation catalysts. We will also aim to
unlock value from SPARK's existing portfolio by accessing the
GBP150m of unutilised capital and trading tax losses."
Pre-close Trading Statement
-- Continued progress on existing assets
-- Healthy pipeline of opportunities
There has been considerable progress made in letting the
available space at Southern Gateway and the building will shortly
be effectively fully let with the consequential benefits to the
group.
Planning permission has been granted by the local authority in
respect of the land at Newton-le-Willows and the agreement with
Persimmon Homes Limited is expected to complete next month.
Following a strong trading statement and award of preferred
bidder status with Network Rail, the Company is pleased to note the
improvement in the share price of SpaceandPeople Plc where the
Company has a significant investment, which will be reflected in
the results for the period.
The team continues to appraise acquisition opportunities and has
a healthy pipeline of opportunities.
Gresham House expects to announce its interim results on
Wednesday 23 September 2015.
Enquiries:
Montfort Communications
Gay Collins / Rory King 07798 626282 / 0203 770 7906
Gresham House plc
Anthony (Tony) Dalwood 020 3837 6270
Gresham House Asset Management
Graham Bird 020 3757 5613
Westhouse Securities Ltd
Robert Finlay / Richard Johnson 020 7601 6100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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