Gresham House
Specialist asset management
Our Private Equity strategy offers investors access to fast growing, early-stage and lower mid-market private companies.
Our Private Equity strategy offers investors access to fast growing, early-stage and lower mid-market private companies.
Our team has backed high-growth businesses for more than a 20 years and has invested in more than 100 companies.
Through these investments we have built an extensive entrepreneurial network and sector expertise to support our portfolio companies as they deliver their growth plans.
We are focused on scaling software and digitally-driven businesses in the healthcare, consumer and services sectors, aiming to deliver sustainable structural growth for our companies, alongside the potential for robust returns for investors.
Our key sectors
Key documents
We have a consistent, repeatable approach for accelerating growth and realising shareholder value in the businesses we invest in.
We aim to invest in ambitious businesses who want to partner with an engaged and professional investor, who can provide capital and a range of specialist skills to support delivery of their growth plans.
Our Private Equity funds
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What is Private Equity?
Private Equity is an alternative asset class that invests in, or acquires, private companies. Private equity invests in companies that have a high-growth prospects over the medium to long term.
At Gresham House our private equity investments are made via a range of venture capital trusts (VCTs) for which we are the investment manager or investment adviser.
Venture capital funds invest in companies at an early stage in their development. In contrast, private equity funds invest in more mature companies.
How Private Equity creates value?
Private equity businesses or investors buy companies or stakes in companies and then look to improve their value, at which point they will look to ‘exit’ or sell their stake either on the stockmarket to a corporate buyer or to another investor.
There are different ways that Private Equity seeks to create value. These are broadly through:
- Deal origination and transaction execution – this involves building and maintaining relationships with mergers and acquisitions (M&A) professionals including intermediaries and investment banks to find businesses looking for capital that are attractive investment opportunities. This is a competitive marketplace so an extensive network to highlight these opportunities and to ‘close deals’ is a major way of delivering value.
- Portfolio management – by actively engaging with and supporting the businesses they acquire, private equity investors can drive significant value. This can take many forms including providing strategic and financial planning, talent management and management incentives.
- Cost management – by managing the bottom-line as well as increasing the topline drives value. Cost management includes cost-cutting as well as selling non-core assets.
The are nine types of private equity funds:
- Venture Capital (VC)
Venture capital is a form of private equity and financing that deals with funding early-stage start-ups and new businesses. Venture capitalists invest in companies that they believe have high growth potential.
- Growth Equity
Companies raise capital through growth equity to boost expansion. Growth equity, also known as growth capital or expansion equity, works similarly to venture capital but it’s less speculative.
- Leveraged Buyout (LBO)
A leveraged buyout fund strategy combines investment funds with borrowed money.
It’s called leveraged buyout because the buying company leverages creditors’ and investors’ money to afford larger buyouts.
- Real Estate Private Equity (REPE)
Real estate private equity funds invest in properties using different strategies. Some funds are conservatively invested in low-risk rental properties offering stable, predictable income. Other funds invest in land or speculative development deals, which offer high return potential and greater risk.
- Infrastructure
Infrastructure private equity works similarly to real estate equity. The difference with infrastructure funds is that they invest in assets that provide essential utilities or services. This includes sectors like: utilities (e.g., gas, electricity, water), transportation (e.g., airports, roads, bridges, rail transit), social infrastructure (e.g., hospitals, schools), energy (e.g., power plants, pipelines), renewable energy (e.g., solar power plants, wind farms).
- Fund of Funds
A private equity fund of funds raises capital from investors but doesn’t invest in private companies or assets. Instead, it acts as an investor and buys into a portfolio of other private equity funds.
- Mezzanine Capital
The mezzanine floor of a building is halfway between one floor and another. Hence, this type of fund is aptly named because mezzanine capital is halfway between debt financing and raising equity capital. Companies typically use it to raise funds for specific projects.
- Distressed Private Equity
Distressed private equity funds, also known as special situations, specialise in lending to companies in financial crises. When the funds invest in companies, their purpose is to take control of the business during the bankruptcy or restructuring processes so they can buy the company at a lower purchase price. Then, they’ll work to turn the companies around and, eventually, sell them.
- Secondaries
Secondaries funds sometimes buy companies or assets and invest in other private equity funds portfolios, but that’s not the primary use. Instead, the secondary market exists to buy investments committed in a fund.
A typical private equity fund has an initial duration of 10 to 12 years. The first five years are called an investment period. The years after that are the harvesting period, during which investors can sell their investments.
If an investment hasn’t reached the harvesting period but an investor needs or wants to take their money out, the only way to do that is to sell through the secondary fund market.
