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Mobeus acquired by Gresham House

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127tolmers
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Mobeus acquired by Gresham House

#441167

Postby 127tolmers » September 10th, 2021, 8:57 am

https://www.investegate.co.uk/gresham-h ... 00093864L/

Another acquisition by GH after Hazel and Baronsmead.

Gresham House (AIM: GHE), the specialist alternative asset manager, is pleased to announce its intention to acquire the Venture Capital Trust ("VCT") business of Mobeus Equity Partners LLP ("Mobeus") for an initial consideration of £24.0 million, with further consideration of up to £12.1 million payable over a three-year period and subject to the achievement of certain criteria (the "Acquisition").

Mobeus is a UK-based investment firm managing assets across two distinct client groups, one of which is the VCT business being acquired by Gresham House. The four VCT contracts being acquired from Mobeus are with Mobeus Income & Growth VCT plc, Mobeus Income & Growth 2 VCT plc, Mobeus Income & Growth 4 VCT plc and The Income & Growth VCT plc (together, the "Mobeus VCTs"), with a combined AUM of £369 million. Following an extensive due diligence process, the Mobeus VCT Boards have unanimously approved the transaction.


https://www.investegate.co.uk/mobeus-in ... 10183878L/

Mobeus and Baronsmead are two of the leading names in the VCT industry. The transaction combines two investment and operations teams with market-leading track records, each with more than 20 years' heritage and experience, creating a significant platform in the VCT market across over £850 million of shareholders' funds. Each of the Mobeus VCTs' and the Baronsmead VCTs' brands will retain their individual investment strategies to offer investors the choice of two high-quality offerings. The Mobeus VCTs will remain focused on unquoted investments, whilst the Baronsmead VCTs will continue to invest in both unquoted and public companies traded on AIM.

The entire core management, investment and operational teams involved with the Mobeus VCTs will all transfer to Gresham House in connection with this transaction to form a significant enlarged team that will manage both the Mobeus VCTs and the Baronsmead VCTs. A wide-ranging multi-year agreement has been put in place between Mobeus and Gresham House to enable a smooth transition and continuity of management of the VCTs (including continuing to use the 'Mobeus' name for a period).

The Boards are pleased that Trevor Hope and Clive Austin, the two leading partners involved with managing the Mobeus VCTs' investment portfolios, are joining Bevan Duncan and Ken Wotton, who lead the investment management of the Baronsmead VCTs, in becoming the senior management team of the Strategic Equity division within Gresham House. Trevor and Clive will remain responsible for the investment, portfolio, and fund management of the Mobeus VCTs, alongside their investment and operations teams. They will be supported in the transition by Mobeus founder partners Mark Wignall and Rob Brittain who will act as consultants to Gresham House.

The Boards' considerations
After careful consideration and due diligence, the Boards believe that consenting to the novation of the investment advisory arrangements is in the interests of the Mobeus VCTs' shareholders. The Boards expect the creation of the enlarged VCT team to be well received by the market as creating an exciting and potent commercial force that should lead to enhanced prospects for Shareholders. In the context of a VCT sector that is evolving, this view is predicated on:

· Scale Advantage - The integration of the Mobeus and Baronsmead VCT teams within Gresham House creates one of the largest VCT teams in the sector with the coverage, experience, contacts and know how to access more and higher quality investment opportunities. The greater breadth and depth of resource in portfolio and talent management should also be valuable in assisting the Mobeus VCTs' existing portfolio companies to grow successfully.

· Continuity - Trevor Hope and Clive Austin will continue to lead the VCT team and will be supported in the transition by Mark Wignall and Rob Brittain. This management group is well known and has been highly regarded by shareholders for a considerable period. The Boards are confident that the team will continue to build the Mobeus VCTs' portfolios and enhance their value. Gresham House's investment philosophy is similar to that developed over many years by Mobeus, and the procedure for undertaking due diligence and approving new investments will be substantially the same as before.

· Portfolio Diversification - The access to a much larger asset base and investment opportunities should enable the combined VCT investment team to build more diversified VCT portfolios across a broader range of sizes and stages of investment. The Boards believe that this combined VCT investment team will be a major force in the supply of capital to the VCT sector and it is anticipated that the team's enhanced market position should attract strong deal flow.

· Investment in Capability - The Mobeus VCT investment team has delivered outstanding performance over many years, but it has become clear that the changing demands of the market mean that the requirement for additional investment in people, technology and processes could become constrained within the framework of the existing Mobeus partnership structure.

The Boards can confirm that no material changes are being made to the terms of the investment advisory arrangements. Shareholders can also be assured that the Boards' track record of governance and independence will be maintained.

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Re: Mobeus acquired by Gresham House

#441194

Postby CrackAddick » September 10th, 2021, 10:19 am

The announcement also went on to add that they plan to raise new money after the migration completes.

The Boards are also aware that there is strong demand to subscribe for new shares in the Mobeus VCTs. As such, the Boards will, following completion of the novation of their investment advisory arrangements to Gresham House, be considering raising new additional funds and launching offers for subscription in the 2021/2022 tax year. Further announcements will be made in due course.


That will give me something to ponder, as the Mobeus VCTs have historically been one of my better performers.

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Re: Mobeus acquired by Gresham House

#441216

Postby UncleEbenezer » September 10th, 2021, 11:25 am

Anyone else slightly uneasy at this level of consolidation? A bit like the once-proposed Sainsburys/Asda merger, it feels like it could be a significant reduction in market choice.

When I first invested in VCTs (about 2009) there were several main players in the market, but noone huge and dominant. Consolidation involved failing VCTs getting taken over, then the many family mergers as the rules ceased to incentivise families of small/identical funds.

Now we have Octopus grown organically through Titan, and Gresham by acquisition. Is there a risk this decade will lead towards a world of just Gresham, Octopus, and a few marginal niche players?

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Re: Mobeus acquired by Gresham House

#441239

Postby Gostevie » September 10th, 2021, 12:18 pm

Given the poor performance of the Baronsmead VCTs since Gresham House took over, this has very much put me off investing in any potential Mobeus fundraise.

Gostevie

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Re: Mobeus acquired by Gresham House

#441292

Postby Karellan » September 10th, 2021, 3:44 pm

Gulp ! I was considering buying Mobeus next year as like many they have been a strong performer for me. Think a bit more. I wonder if they see these VCT portfolios as a good income stream.

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Re: Mobeus acquired by Gresham House

#441400

Postby james188 » September 11th, 2021, 8:02 am

I think that acquisition of VCT management contracts by the likes of Gresham House and Mercia will inevitably continue. Arguably, it is a sign of maturity of the sector and there are obvious potential benefits. However, there are clear risks and these tend to be underplayed.

For example, retaining key management personnel is always stressed to be an important feature of the agreed arrangements, but it doesn’t always turn out that way. When Mercia too over the Northern VCT management contracts, Charlie Winward was repeatedly stated to be the heir apparent to Tim Levett - he would be a key part of the new senior management team. Within a matter of a few months, he decided that it was not for him and he left. You just never know, so we will have to wait to see how this one plays out.

One concern that I have is whether the distinctive investment styles of Baronsmead and Northern are maintained in practice (and I know that the RNS says that they will be). With what appears to be a largely merged team. I wonder. And to what extent will both VCT groups go after the same opportunities? Quite a few things to discuss at the next Mobeus meeting, but it is a done deal.

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Re: Mobeus acquired by Gresham House

#446874

Postby sinterklaas » October 1st, 2021, 9:44 am

And completed this morning. Hopefully we will now hear about whether there’ll be a share offer.

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Re: Mobeus acquired by Gresham House

#447434

Postby Karellan » October 3rd, 2021, 11:17 am

Nothing lasts for ever but my Baronsmead / Mobeus / Northern / Close / YFM holdings dont owe me anything so I cannot say that I am too distressed. Hopefully the new managers will produce more ordinary unexciting dividends. however there must be something that the new managers want from the game and I hope its not to soak the poor existing shareholders.

It would seem prudent to look at the up and coming offerings that may well become the big players of tomorrow. I quite like Pembroke , it seems to have grown. Blackfinch is possibly an interesting one to keep an eye on. One has to be careful and there are still several VCTs of small capitalisation and I prefer them to be a bit more sizeable now than years ago. I thought that Calculus was going to grow a lot but I am not sure that it has. Are there any other suggestions ?

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Re: Mobeus acquired by Gresham House

#447458

Postby UncleEbenezer » October 3rd, 2021, 12:53 pm

Karellan wrote:It would seem prudent to look at the up and coming offerings that may well become the big players of tomorrow.

Does Pembroke still count as new (wasn't Titan its immediate predecessor as a new generalist launch)? I find myself somewhat baffled by its success, but then it's in a market alien to me. And I thought Calculus was rebranded rather than new?

The VCT world is always in flux to a greater or lesser extent. Whilst we may be cautious about change, the Octopus Apollo thread here has some pretty positive sentiments about changes to that. We've all been cautiously watching the no-MBO rules, but for the time being at least fallout from that is comprehensively trumped by the wall of newly-printed money floating all boats.

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Re: Mobeus acquired by Gresham House

#447469

Postby Karellan » October 3rd, 2021, 1:14 pm

I would regard Pembroke as pretty new and seems to be getting going. When I went into VCTs in 2004 Baronsmead and Close Bros had been going for several years and had a track record. Octopus Titan is about 2008 / 09 ? , Octopus have an advantage that as a big financial player they can be treated with some confidence that they shouldnt just shut up shop overnight. A bit like Downing (although they may still be transitioning from their stable of fixed term VCTs). When Calculus started (I think I am right) it did quite well and the shares rose in price however these years later its still a smallish VCT. Firms like some of the others mentioned before have made a lot of investors a decent return over many years.

Indeed the influx into VCTs is encouraging and when we thought demand was over. Just shows predicting the future is difficult.


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