Gresham House is led by chief executive Tony Dalwood, the former boss of Schroder Ventures, who took the helm at the end of 2014 with the aim of establishing a specialist asset management group focused on managing funds and co-investments across a range of differentiated and illiquid alternative investment strategies. Aitchesse was the company’s first acquisition and a sensible one too given that in the past decade UK forestry clients have shown an annualised return of 18.3 per cent net of all costs and management fees. That’s almost three times higher than that on UK equities. The pricing and investment backdrop for forestry investments remains favourable and there are substantial tax advantages in the UK. Aitchesse reported pre-tax profit of £946,000 on revenue of £2.27m in the 12 months to the end of June 2015, so the £4m initial consideration and £3.7m maximum earn-out look sensible to me.
The Gresham House Forestry Fund will initially acquire a portfolio of five forests with an aggregate size of 1,975 hectares for a total consideration of £12.1m including all costs and taxes. It will be structured as a Scottish Limited Partnership (SLP) with a target size of £25m. Aitchesse has signed a contract to purchase the forestry portfolio from a property trust controlled by an established UK Pension Scheme and the plan is for the Gresham House Forestry Fund to then acquire the portfolio from Aitchesse with completion expected on or before 31 July 2016.