Latest news with #GreshamHouse
Reuters
28-05-2025
- Business
- Reuters
Gresham House raises $500 million for its biggest ever forests fund
LONDON, May 28 (Reuters) - Alternative asset investor Gresham House has raised $500 million for its biggest ever forestry fund, with backing from investors including several British local government pension schemes, an executive told Reuters. Investing in timber has become increasingly popular with asset owners looking for returns uncorrelated with the broader financial markets, and which also help them hit their environmental goals. The final close for Forest Fund VI, which will target returns of around 8%, will see 375 million pounds ($508 million) invested in planting new and existing forests across the country, said Olly Hughes, who heads the forestry team. "It's the largest fundraise in a single fund that we've raised and a signal of the interest and the momentum that's building around the sector as a whole." Historically, most investment demand has been seen in the United States, with the fragmented mainland Europe and British markets more difficult to invest in at scale, he said. The fundraising was backed by London CIV, which invests for a number of local government pension schemes in the capital, member schemes in the Wales Pension Partnership and an unidentified Japanese investor. It also follows the recent signing of the Mansion House Accord, where some of Britain's largest workplace pensions providers signalled a willingness to increase their allocation to private markets in the country. "This (fundraising) ... has enabled a number of larger-scale UK and international institutional investors to access the market for the first time," and would also help the country achieve its broader sustainability goals, Hughes said. With Britain importing 80% of its timber and wood fibre, the fund would help bolster rural economic growth and the timber used in local construction and other industries in a more environmentally-friendly way, he added. The fund aims to lock away 4.7 million tons of climate-damaging carbon dioxide over the next 25 years, and could potentially generate carbon credits which could be sold to add to its returns. "Forestry offers the compelling combination of uncorrelated financial returns and measurable environmental benefits – from boosting biodiversity to contributing meaningfully to carbon sequestration," said Elwyn Williams, Chair of the Joint Governance Committee for the Wales Pension Partnership, in a statement. ($1 = 0.7409 pounds)
Times
27-05-2025
- Business
- Times
Two big UK battery storage developers favour zonal pricing
Two of Britain's biggest battery storage developers have come out in favour of regional electricity pricing, despite opposition from their peers who argue that the radical shake-up will deter investment. Gresham House and Statera both told The Times that zonal pricing would cut the costs of operating Britain's energy system, ensuring that batteries were built in the right locations to help deal with surplus wind power. Ben Guest, head of energy transition at Gresham House, operator of the UK's largest battery storage fleet, said it believed zonal pricing was 'an essential step for the UK's electricity system' to help 'motivate investment where it is most needed'. The government is expected to decide imminently whether to ditch Britain's national wholesale electricity price and introduce a system with about seven to twelve regional zones. Prices in each zone would vary depending on the supply and demand balance in the area, ensuring that wind farms in remote locations could not sell their electricity to consumers at the other end of the country if there were not sufficient cables to physically deliver the power. At present the National Electricity System Operator spends hundreds of millions of pounds every year dealing with such cabling constraints by paying wind farms to switch off and gas plants nearer demand to fire up and replace them. Batteries installed near wind farms could address the problem by storing surplus power when it is windy and discharging it in calm weather, smoothing out supplies. However the national market does not always provide the correct price signals: batteries in Scotland might discharge because the national price is high, even if their area is already swamped with power. In a zonal system, the excess power would depress the regional price, encouraging the battery to charge up. Zonal pricing is highly divisive in the energy industry, with wind farm developers and other generators generally opposed and some household suppliers and consumer groups in favour. Guest said Gresham's analysis showed that 'a well-designed zonal pricing system can reduce wholesale energy costs and reduce the need for a lot of the planned electricity network upgrades and associated pylons'. Zonal pricing would 'incentivise energy storage, the cost of which has been falling sharply, to store renewable energy when generation exceeds demand and then deliver it across zonal boundaries when renewable generation is low and constraint limits are not reached', he said. Tom Vernon, chief executive of Statera Energy, which is building Britain's largest battery storage site at Trafford Park in Greater Manchester, said: 'Developing and dispatching batteries in the right locations is critical for cost-effectively balancing the grid. At Statera, we support zonal pricing because it will make the power system more transparent, and provide a clear price signal for the efficient operation and location of demand and generation.' He said he was 'confident that zonal pricing will lower costs in the long run'. However, other leading battery storage developers said they opposed the change. Harmony Energy said it feared that 'the uncertainty created by such a fundamental shift in market design creates an unnecessary risk in relation to investor confidence at a time when the country needs to get on building out critical infrastructure'. And Amit Gudka, chief executive of Field, said zonal pricing would 'slow down investment' and building out the network should be the priority instead of 'tinkering with the market'. Zenobe, another battery storage company, has claimed that even the prospect of zonal pricing has already 'slashed investor confidence and is inhibiting battery build-out', as the complexity and uncertainty of zonal pricing makes it harder to secure agreements to sell power. A spokesman for the Department for Energy Security and Net Zero said: 'We are considering reforms to Britain's electricity market arrangements, ensuring that these focus on protecting bill-payers and encouraging investment. We will provide an update in due course.'
Daily Mail
13-05-2025
- Business
- Daily Mail
Follow the money! Investors should pay attention to cheap UK smaller companies being snapped up
Investors should sit up and take notice of why private equity firms are snapping up cheap UK smaller companies, fund managers say. The UK's stock market listed smaller companies are repeatedly becoming the target of takeover activity, as bargain share prices and a lack of interest from investors offer a chance for private equity buyers to grab value. But the lack of upbeat sentiment from big investors provides an opportunity for smaller investors to profit, says Abbie Glennie, co-manager of Abrdn UK Smaller Companies Fund and the Abrdn UK Smaller Companies Growth Trust. He said: 'These discounts reflect the negative sentiment that we've seen towards UK smaller companies in recent times. True it's been a tough period for the sector – with weaker performance and tightening regulation. But ultimately negative sentiment is just that – sentiment.' The average premium paid in small cap takeovers compared with undisturbed share prices over the past 18 months is over 50 per cent, according to Ken Wotton, of Gresham House's Strategic Equity Capital. Clearly, buyers think there is value in UK small caps that investors aren't seeing. 'The UK is at multi decade discounts relative to global equities,' says another small cap manager, says Wotton. 'Depending on how small you go, the discount of smaller companies versus larger ones gets bigger.' Data from Aberdeen indicates that UK smaller companies are significantly undervalued based on 12-month forward price to earnings ratios compared with the ten-year average. Looking cheap is true for smaller companies around the world, says Aberdeen, with small caps trading at discounts globally: European small caps at a 28 per cent discount, US small caps at an 26.9 per cent discount and Japanese firms 19.4 per cent lower. But the tide may be turning on UK small caps. These are trading at a discount of 14.6 per cent to their ten-year average, after strong performance over the past month. Whereas, in March, the discount for UK small caps was the largest of any major market at 23.4 per cent. The uptick for UK smaller companies could reflect investors finally paying attention to a raft of buyouts and major investments. The highest takeover activity was seen within the tech, media and telecoms sectors, while consumer goods and retail also saw an uptick. Glennie added: 'Confidence in the US 'mega caps' has waned and investors are looking for ways of reducing their exposure. So interest in other asset classes is increasing. 'Within the UK, people are more favourable towards domestically focused UK companies than we've seen in many years. All this could be positive for UK smaller companies. 'So far we haven't seen this transform into a major shift in sentiment towards UK smaller companies and flows into the asset class – but the foundations for a turnaround are being laid.' Compared with private market valuations, small caps on public markets are trading at discounts of around 30 per cent. In some cases, Wotton says, these discounts reach 50 per cent. 'That's creating a big dislocation gap arbitrage opportunity between private markets, international markets and the UK small Caps,' Wotton said. It is this disparity between prices that is creating interest from potential buyers and leading to elevated takeover activity in the sector. Wotton said small cap buyers range from US and European private equity firms to corporate strategic buyers from the UK, Europe and the US. 'The consistent theme is not who's buying, the consistent theme is the valuations of what's being bought,' Wotton said. What do takeovers mean for small caps? As long as UK small caps are widely undervalued, they will remain potential takeover targets. 'I would expect takeover activity to continue to be elevated,' Wotton told This is Money. 'I think that what changes it will be valuations moving up in the UK, small cap sector or alternative valuations moving down in other areas.' Wotton adds: 'It's clear that there are valuation opportunities there because that's why there are takeovers happening at a premium.' There are concerns that one effect is that the UK small cap market is gradually being hollowed out by private equity buyouts and delistings. A downturn in UK IPO activity is also compounding the dire situation the small cap market finds itself in. Some firms are breaking that cycle, such as the listing of a new British bitcoin holding company, by Smarter Web Company, but these instances are rare. Last year, Peel Hunt said the FTSE SmallCap index could cease to exist by 2028 if current trends continue. An extreme scenario, perhaps, but Wotton says there is little indication that investors are changing their minds on small caps. He said: 'I've been expecting the elevated level of takeover activity over the last couple of years to be the catalyst which really shines a light on this valuation discrepancy and attracts more money back into the UK small cap market. 'That hasn't really happened and you've seen instead you've seen this kind of relentless month on month on month outflows from UK funds.' How to profit from UK smaller companies Fund managers, Wotton says, aren't powerless to stop their holdings falling victim to opportunistic takeovers. Strategic Equity Capital, the investment trust that Wotton manages, zeroes in on the long-term fundamentals of the firms it invests in, 'trying to cut out the noise of short term sentiment' and 'really focus on the long term business fundamentals and quality companies trading at attractive prices'. However, beyond this, Wotton says the key is that Strategic Equity Capital is prepared, and willing, to actively engage with companies they invest in. Strategic Equity Capital, Wotton said, is willing to take higher stakes in businesses, allowing them to be proactive in engaging with the companies. He said: 'We make a very clear distinction between activism - we do not consider ourselves to be activists - and constructive active engagement, which we do consider ourselves to deploy. 'This means working with management teams and boards that having an input into key issues which we think are really important for shareholder value perspective such as the business strategy, capital allocation, board composition and management incentives being aligned with shareholder value over the longer term.' Being engaged, he says, also allows them to make introductions to people or firms that can help specific companies, as well as to 'support value creation and hopefully add value ourselves along the way.' The aim of this, of course, is to improve small cap valuations to a point they can't be snapped up at discounts by private equity firms. However, this strategy can also help to fight off unwelcome takeover attempts. He adds: 'In an environment where there's lots of takeover approaches, some of which are quite opportunistic because of the low valuations, the last thing that we as a shareholder or the management team or the board want is for someone to come along at a 30 per cent premium to a depressed price and then shareholders capitulate and the company gets sold.' 'Where we've got a big stake, potentially we can, we can block that from happening and we have done that in a few situations. 'So as a board, if you have good supportive dialogue with [an investor] then you know that as long as you're doing the right things and it's aligned with what we all kind of agreed is the right thing to do, we're not going to capitulate in that situation.'
Zawya
28-02-2025
- Business
- Zawya
EU green finance row-back sets climate investment challenge
LONDON - A move by the European Commission to pare back its flagship sustainability reporting rules risks making it harder for investors to decide where to put their money to help the bloc reach its climate goals. Since the 2015 global deal on limiting climate change was reached, Europe has set the pace in figuring out how to move the real economy towards net-zero emissions by 2050, including by beginning to define what a "green" investment looks like and by having companies disclose their environmental footprint. That regulatory backdrop had led to a sharp rise in new European financial products aligned with the bloc's climate goals, which include a near-term aim to cut net emissions 55% by 2030. Faced with growing pressure from companies and some EU governments to help struggling industries, and in view of the rejection of climate change action by the United States under Donald Trump, the European Commission on Wednesday laid out plans to trim the reporting burden on firms. As well as slashing the number of companies having to report data, the EU executive proposed scaling back a landmark supply chain due diligence law and softened penalties for those that breach it. While supporters said the moves would allow firms to focus on actually cutting emissions rather than filling out paperwork, others said it would make it harder to compare the actions of companies. "By introducing broad exemptions and postponements, the proposal risks undermining critical sustainability objectives," said Hyewon Kong, Sustainable Investment Director at investor Gresham House. As well as reducing the number of companies obliged to report emissions data under its Corporate Sustainability Reporting Directive by more than 80% and delaying the reporting deadline for others, Brussels scrapped plans for sector-specific reporting standards. Ashley Hamilton Claxton, head of responsible investment at Royal London Asset Management, said she welcomed the move to simplify what had become a "complex regulatory environment", but called the loss of sector-specific standards a "setback". "This information is essential for... assessing the alignment of companies with the goals of the Paris Agreement," she said. EU officials said the moves would not weaken the bloc's climate targets but rather make it easier for companies and investors to implement them in the real world. Nathan Fabian, chief sustainable systems officer at U.N.-backed investor network the Principles for Responsible Investment, said the proposals would "materially reduce" investors' access to the information they need. Marjella Lecourt-Alma, chief executive of data firm Datamaran, said while most major companies would still be covered by the rules, fewer disclosures could see investors "struggle to connect the dots" on risks that impact valuations. While smaller companies could report voluntarily, the proposed rules would limit what extra sustainability information banks and other investors could ask them to share. Filip Gregor, Head of Responsible Companies at advocacy group Frank Bold, said this created a risk that those who ask companies for extra sustainability information "could be prosecuted for their efforts". Corporate reporting against the bloc's "taxonomy" of green activities, meant to help investors better understand a company's positive environmental efforts, would also be changed to release 80% of firms from disclosing. By delaying reporting deadlines for many firms until close to the EU's 2030 emissions-cutting target date, Brussels may hamstring its ability to meet the goal, said Matthew Fisher, head of policy at sustainability firm Watershed. "If you delay and pause that disclosure and transparency, it undermines these very ambitious goals," he said. "I don't think those two things are consistent, fundamentally".
