Gresham House buys RESI’s manager – specialist asset manager, Gresham House is buying TradeRisks Limited, which, amongst other things, is the manager of Residential Secure Income REIT. Gresham is paying £7m upfront and up to £4m more subject to the achievement of certain performance targets.
TradeRisks has a fund management business and is aslo specialist provider of debt structuring and advisory services to the housing and social infrastructure sectors.
Gresham House already has some exposure to the social housing market. RESI gives it its first listed fund in the housing segment. The deal takes Gresham’s assuets under management to around £3bn. It says the deal will be earnings enhancing for its business and expects it to exceed its medium-term 15% return on invested capital target (after extracting some costs from the combined firm).
Anthony Dalwood, Gresham House’s chief executive, said: “Gresham House is focused on investing in sustainable real assets and the acquisition of TradeRisks and RCM is consistent with the group strategy to grow existing platforms. The acquisition allows Gresham House to enhance its social and affordable housing offering for clients, an area identified as structurally important to the UK economy, through a capable management team with strong track record.”
In the year ended 31 July 2019, TradeRisks reported audited profit before tax of £2.2m and gross assets of £9.7m. When adjusted to reflect Gresham House’s accounting policies, which will be applied post-completion, for the year ended 31 July 2019 TradeRisks generated revenues of £5.6m and EBIT of £1.8m.
Following completion, all 23 employees will join Gresham House’s Real Assets division.
Of the £7m upfront price, £3.5m is payable in cash (from existing Gresham cash resources) and £3.5m funded through the allotment of 555,555 ordinary shares to the vendors, based on a share price of 630p.