Gresham, the UK mid-market specialist, is the latest private equity entity to break free from its parent to become independent. The group is spinning out of Zurich Financial Services Group, which has facilitated the spin-out as the new entity’s cornerstone investor, committing £265 million to the new vehicle.
It’s business as usual: the team remains intact, is operating from the same premises and retains the same name and the same strategy. The senior team comprises chief executive Paul Marson-Smith and directors Mike Henebery, Simon Inchley, Ken Lawrence and Paul Thomas. Marson-Smith sees the move as a logical step forward: “Now is the right time having produced consistent returns and a well respected record of investing in the middle market sector. Independence paves the way for us to broaden our financial base by raising additional capital from outside the Zurich group. At the same time, we are delighted to retain the backing and confidence of our former parent.”
The team will start fund raising as soon as it gets FSA approval, which is expected by spring 2003. A target amount has yet to be decided.
Zurich’s decision to focus on its core activities coincided perfectly with Gresham’s ambitions to expand the business and offer its proven expertise more widely, said Marson-Smith.
Sandy Leitch, chief executive of Zurich UKISA, said: “This transaction enables us to continue to benefit from the expertise of Gresham’s successful management team in this attractive sector of the private equity market, while concentrating on our core business.”
Gresham invests in UK mid-market companies in transactions valued at between £5 million and £75 million. The group currently has a portfolio of 35 investments and has completed 45 exits since 1998, worth over £140 million, at twice the original cost.
Gresham became a wholly-owned subsidiary of Zurich Financial Services Group in 1998 following Zurich’s acquisition of British American Financial Services group.