Gresham House launches first institutional private equity fund to back UK growth companies

Gresham House, the alternative asset manager, has launched a new limited partnership to enable institutional investors to support growth companies in the UK and Ireland amid growing regulatory pressure for pension funds to invest in unlisted equities.

Gresham House Private Equity Release LP has successfully raised just shy of £60mn, in excess of its original £50mn target, from cornerstone institutional investor, Worcestershire Pension Fund and a number of corporate and private investors in the UK and Ireland.

The fund will seek to provide secondary capital into established portfolio companies of Gresham House’s Mobeus and Baronsmead venture capital trusts (VCTs), enabling an immediate and vibrant pipeline of opportunities into which capital can be swiftly deployed. The strategy will also have the flexibility to provide secondary, buyout or acquisition capital into new investment opportunities or to co-invest alongside the VCTs into new investment opportunities where there is a requirement for both primary and secondary capital.

With the recent Mansion House reforms aiming to encourage pension funds to invest in unlisted UK businesses, the fund offers institutional investors an opportunity to back companies that have already delivered robust growth for the Mobeus and Baronsmead VCTs, while taking advantage of existing due diligence.

The strategy will make investments of £1-10mn in 10-15 growing businesses with strong underlying profitability and enterprise values of £10-50mn. Co-managed by Greg Blin and Trevor Hope along with Gresham House’s wider specialist private equity team, it will target a 2.5x money multiple and net IRRs of 20%.

It will also benefit from Gresham House’s existing scale and experience in the venture capital space. Gresham House Ventures, the company’s growth equity division, is the second largest VCT manager in the UK with around £800mn in assets under management across its Mobeus and Baronsmead VCTs.

The launch builds on Gresham House’s existing offering for institutional investors, which includes funds investing in forestry, real estate, and new energy technologies. It follows the recent launch of the Gresham House Secure Income Renewable Energy & Storage LP, which invests in collocated renewable and battery storage projects in the UK.

Trevor Hope, co-fund manager of the Gresham House Private Equity Release LP, said: “Our dedicated private equity team has already built an outstanding track record in the venture capital space, and we are pleased to be bringing this expertise to a wider range of investors with the launch of this new fund. We have seen increasing interest from pension funds in private equity in recent years and we believe our strategy represents a genuinely differentiated offering for the institutional market.”

Elizabeth Ayre, chair of Worcestershire Pension Fund, said: “Private equity has an important role to play in our portfolio both as a driver of returns and as a diversifier. Gresham House’s longstanding experience investing in growth companies makes this fund a particularly attractive proposition for us, and we are excited to be supporting early-stage businesses across the whole of the UK in a range of exciting sectors, from technology to healthcare, with our investment.”