When Gresham House delisted from the London Stock Exchange in December following a £470m deal to take it private, the specialist asset manager became the latest to join a growing list of UK companies that have been snapped up by private equity firms.
Gresham House, which was founded as an investment trust in 1857 and has since grown to become an alternatives boutique with around £8bn in assets, was acquired by private equity firm Searchlight Capital Partners in July last year.
Following the deal’s completion in December, Gresham House — which focuses on sustainable assets such as battery storage infrastructure — delisted from the Aim market, a decade after it first appeared on the index for smaller companies.
According to Peel Hunt, take-private transactions such as Searchlight’s acquisition of Gresham House made up the majority of M&A activity in 2023, with private equity firms accounting for 51% of all deals.
Examples include Apollo’s £506m deal for the Restaurant Group and UK funeral group Dignity being acquired for £281m by an investor consortium including Phoenix Asset Management Partners.
“One of the things that comes up is people saying this is another example of the stock market not working. But I would argue we are a great case study for the stock market working,” Tony Dalwood, CEO of Gresham House, told Financial News.
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“The business had a £15m market cap back in 2014. We put in place a team, a strategy and we accessed the capital markets and we grew it to almost £500m on the London Stock Exchange. It’s a success story.”
He added: “We are on the next leg of our journey, it just happens to be unlisted.”
Dalwood said the Searchlight deal will provide Gresham House with the firepower and capital needed to grow its international footprint via M&A deals, which will predominantly target forestry, renewables and housing. It has also set a target to grow assets under management to more than £20bn over the next five years.
Gresham House’s growth over the past decade should be viewed as a success story for the UK, said Dalwood. But he acknowledged that London was struggling to keep hold of listed companies.
Several UK firms have announced plans to leave the London stock market in recent months, including gambling group Flutter, which plans to move its primary listing to New York.
Cambridge‑based chip-maker Arm and building materials business CRH have also opted for US listings.
“This is a global phenomenon, not just something affecting the UK. The amount of regulation, transparency and reporting requirements — that’s quite a burden for a listed company,” said Dalwood.
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“On top of that, you want to attract the best talent and pay them, without being told they are earning too much. That’s why some of the best talent has been attracted to private companies, because they don’t have to justify pay.”
The comments come after London Stock Exchange boss Julia Hoggett said last year that the ability of UK-listed companies to attract and retain talent was being “hampered” by asset managers that vote against executive pay policies, even when pay levels are “significantly below global benchmarks”.
She added that the same firms that oppose executive pay levels in the UK often “support much higher compensation packages in different jurisdictions, notably in the US”.
This created a “lack of a level playing field for UK companies”, she said.
However, Dalwood said the “lack of liquidity in the UK market” was one of the main challenges faced by smaller listed companies.
“Institutional investors typically cannot invest in anything below £1bn or £2bn — that’s basically anything below the FTSE,” he said.
“If you can’t get institutional investors to look at those companies, demand falls and the share price falls. That’s the economic result of having low demand for shares in the UK.”
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