Anthony "Tony" Dalwood
The ink has only just dried on private equity firm Searchlight Capital Partners' £470 million ($590 million) deal to take alternatives firm Gresham House private, but Anthony "Tony" Dalwood, Gresham CEO, is already talking about more than doubling the firm's assets under management and more M&A.
The deal closed on Dec. 19, with trading of Gresham House — which went through a management buyout and was listed in 2014 having been founded in 1857 — delisted on the London Stock Exchange on Dec. 20.
Now Dalwood, who has been CEO of since January 2015, has some ambitious five-year plans to work on under his "GH 30" strategy.
"We want to more than double AUM to £20-odd billion over the next five or six years. And strategically, we want to enhance where we are through organic growth and M&A — there will be a lot of M&A hopefully to grow internationally," he said in an interview on Dec. 20. Gresham had £8.3 billion in assets under management as of June 30.
The firm manages assets across strategic equity — with £1.1 billion in listed equities and £805 million in private equity — and real assets strategies, made up of forestry (£3.5 billion), new energy and sustainable infrastructure assets (£2.1 billion), and real estate (£759 million) strategies, according to its interim report as of June 30. Those assets are run across U.K., Ireland, Australia and New Zealand for institutions, charities, endowments, family offices and other investors.
But with Searchlight's backing, Gresham House will "take that global," Dalwood said. He wants the firm to be a top player in natural capital and forestry, and he wants to take the firm's battery storage strategy and its sustainable infrastructure strategies global, for example.
"I firmly believe the sustainability agenda will kick in again," he said. "What we've seen the last six or 12 months is a lot of people nervous about the interest rate environment, global yields, and (that has made them) step back from allocating to long-term asset classes … I expect that as the world has stabilized a bit in the last six months, that investors who want more access to what we do … will instead of delaying, start kicking on again," he said.
Dalwood and his team have spent more time on international land over the last six months, talking to institutional investors in Japan and Australia "who want to get access, particularly to our natural capital, forestry and energy-transition battery storage products and investments — that's resonating. In 2024, air miles will be going up I expect," he said.
The U.S. is also in his sights, with interest in energy transition, natural capital and increased appetite for forestry allocations. "Our new owners are global, with a big presence in America, so we're hoping to form some relationships there," he added.
And he's not deterred by the pushback in some U.S. states over ESG- or sustainability-related strategies.
"As long as we can show we make money in a good, risk-adjusted way, you have an entry point for any investor. Some of the kickback you see in the States is people saying (investors are) putting ESG ahead of financial return — we're in a really strong position for the financial returns (so) I don't believe that will apply to us," he said.
On the sustainable infrastructure side, for example, the firm's British Strategic Investment Fund I had achieved a 16.2% net internal rate of return as of June, vs. its stated target of between 8% and 10%.
Growth will also come from more M&A, he said. "We will look to do M&A within our existing asset classes — you may see us do that to form a bridgehead in the U.S.," he said. "Ultimately what (we're) trying to do is accelerate that five-year plan."
Dalwood always has target companies in his sights, but "we're going to spend a lot more research looking and trawling the market for appropriate M&A — previously it was more opportunistic without our existing network. Now (we're) going to be actively looking for opportunities to go and find, rather than wait for them to come to us," he said.
In March 2022, for example, Gresham House acquired Irish commercial real estate firm Burlington Real Estate, and in December 2020 it bought Dublin-based active asset manager Appian Asset Management.
Growth ambitions also mean more investment in the company itself.
"We're net investors in our business," Dalwood said, adding that the firm has invested this year — and will continue to invest — in distribution and marketing. "You should expect us to grow 5% to 10% in people number next year — that's part of the plan. That will be a rarity in the financial markets, to actually grow headcount," he said.
But while he has ambitious growth plans, Dalwood is also clear on the need for investors to understand that natural capital, for example, is a nascent asset class, which will take time to understand.
"At the moment, (we are) educating people about financial returns, risks in this area. (Investors) shouldn't get too carried away — it's at an early stage. People understand forestry, but (natural capital is) broader than that — it's new, it doesn't have a long-term track record, and people need to understand what they're doing," he added.
In terms of capacity constraints, though, there's not such an issue for the broader natural capital asset class. "Natural capital is expanding beyond planting trees. It's rewilding, carbon credits, all sorts of offset markets. There are multiple strands to natural capital — so while the demand is growing, there's a long way to go before we get to anything like a supply constraint," Dalwood said.
