Gresham House Strategic Initiation BUY TP 978p Small Cap Specialist With

BUY
UK | Equity Funds | GHS LN | Market Cap 29m | 27 January 2016
Gresham House Strategic Initiation

Small cap specialist with PE expertise
Conor Finn
Next events
2015 results
Acquisitions
Myrto Charamis
+44 (0) 20 3100 2257

conor.finn@liberum.com
Target price 978p

Publication price 793p
+44 (0) 20 3100 2266

myrto.charamis@liberum.com
April 2016
TBC
Stock performance
1,200
1,000
Gresham House Strategic is an AIM-listed investment

company focused on UK small-caps. The manager aims to
identify a concentrated portfolio of stocks with 15%+ IRR
upside by applying private equity techniques to public
companies and engaging with investee stakeholders. It is
well positioned to take advantage of the recent correction in
equity markets with c.40% of the portfolio in cash. We
initiate with a BUY rating and a 978p TP.
Key point
p5
IMImobile upside
p11
The fund managers have a proven

track record of strong absolute
returns over the long-term. The
managers 19% shareholding also
ensures alignment of interests.
IMImobile (43% of NAV) offers

considerable upside given the
potential for organic growth and
accretive M&A activity and its strong
balance sheet.
Strategic public equity
Valuation
p6
The value-oriented strategy ensures a

rigorous understanding of each
investment alongside constructive
engagement with management to
create value.
p18
GHS trades on a 19% discount to

NAV (vs. 10% for peers). We forecast
an 8.7% NAV CAGR to March 2018.
Our 978p TP implies a 10% discount
to our March 2017 NAV forecast.
800
600
400
Jan 15
Apr 15
Jul 15
Oct 15
Jan 16
GHS LN Equity
FTSE SMALLCAP INDEX
Summary financials & valuation (m)

March Year End
EV (FY - Mar. y/e)
Market Cap
Net Debt / (Cash)
EV
2015A 2016E 2017E 2018E

14.7
29.2
29.2
29.2
-6.1
-9.9
-3.7
-2.4
8.6
19.3
25.5
27.1
Valuation (FY - Mar. 2015A 2016E 2017E 2018E

y/e)
Prem / Disc (%)
-26.6 -18.1 -27.1 -32.3
Div Yield (%)
0.0
0.0
0.0
0.0
Financials (FY - Mar. 2015A 2016E 2017E 2018E
y/e)
DPS (p)
0.0
0.0
0.0
0.0
NAV per share (p)
1079
967 1087 1171
Tot Ret % (NAV +
-10.4
12.4
7.7
Divi)
Source: Liberum, Bloomberg
Small cap discount - 12m forward P/E by free float bands

FTSE 100
Average 12m Forward P/E
20x
FTSE 250
FTSE Small Cap

Small Cap discount
below ~320m
18x
16x
14x
12x
10x
8x
87
134
166
206
254
294
341
394
442
514
607
695
787
867
941
1,061
1,219
1,313
1,497
1,760
2,021
2,476
2,983
3,353
4,051
4,684
5,634
7,356
11,824
24,542
54,333
6x
Average market cap (m)
Source: Liberum, Datastream
This document is a marketing communication and has been prepared and distributed by Liberum Capital Limited. It is not independent research prepared in accordance
with legal requirements designed to promote the independence of investment research and is not subject to a prohibition on dealing ahead of the dissemination of
investment research. For Reg-AC certification, see the end of the text. Liberum does and seeks to do business with companies covered in this communication. As a
result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a
single factor in making their investment decision.
This report is prepared solely for the use of Broking Ideas of Liberum

27 January 2016
Contents
Company dashboard_____________________________________ 3
Fund Snapshot __________________________________________ 4
Small cap specialist with PE expertise ____________________ 5
Investment Strategy _____________________________________ 6
Investment policy _________________________________________ 6
Small cap discount creates value opportunity ________________ 6
Strategic Public Equity (SPE) _______________________________ 7
Portfolio _______________________________________________10
IMImobile opportunity for a re-rating______________________11
SpaceandPeople- Recovery potential ______________________13
Miton Group Significant operational gearing _______________14
Castle Street Investments Buy and build with proven
team ___________________________________________________15
Be Heard Group organic growth and buy and build _________16
Quarto Group Strong cash generation and buy and build ___16
Forecasts ______________________________________________17
Valuation_______________________________________________18
Appendix 1 Biographies _______________________________19
Fund Manager __________________________________________19
Investment Committee ___________________________________20
Advisory Group _________________________________________20
Board of Directors _______________________________________21
Disclaimer _____________________________________________22
2

27 January 2016
Company dashboard
Gresham House Strategic is a closed-end investment

company focused mainly on UK small cap
companies. The company is managed by Gresham
House Asset Management and follows a strategic
public equity mandate which applies private equity
techniques to public markets. The manager typically
has a high level of engagement with stakeholders.
The target IRR on investments is 15% over a 3-5
year holding period.
Upside from existing portfolio
Market risk
c.150m of tax losses from legacy business
Dependence on key executives
Rigorous investment process
Illiquidity of underlying investments
Manager's long-term track record
29m mkt cap - share illiquidity
Strong alignment of interests
Potential for cash drag
Small cap valuation discount

50% of realised profits to be distribute
Portfolio sector exposure (22 Jan 2016)
NAV breakdown
Holding
13%
6%
75%
6%
Software
Inv't Co's
Financial services
Media
IMI Mobile plc

Space and people plc
Miton Group plc
Castle Street
Investments plc
Be Heard Group
Quarto Group
Total investments
Key sensitivities
Mkt
Cap
71.4m
11.1m
45.5m
63.8m
%
holding
22%
11%
3%
5%
% of
NAV
43%
3%
4%
3%
12.1m
41.0m
6%
2%
3%
2%
58%
Cash and other net

assets
Driver
Portfolio capital growth
Change Impact on NAV

+/- 1%
+/- 0.7%
42%
How the target price is generated

March 2017 NAV forecast
1087p
Average discount of listed peers
-10%
Target price
Current price
Upside
978p
793p
23.5%
Peer group valuation

Company
Gresham House Strategic
Marwyn Value Investors
Strategic Equity Capital
Crystal Amber
North Atlantic Smaller Companies Investment Trust
Oryx International Growth
Market Cap
Prem / (Disc) to NAV
1 Yr NAV TR
29.2m
162.9m
133.8m
135.0m
326.7m
96.1m
-19%
-13%
-2%
-7%
-18%
-12%
n/a
-12.2%
4.4%
3.5%
22.1%
24.3%
3 Yr NAV TR
(Annualised)
n/a
7.7%
20.0%
7.6%
17.7%
23.1%
5 Yr NAV TR
(Annualised)
n/a
6.5%
17.4%
8.2%
13.6%
18.2%
Source: Liberum, Bloomberg, Gresham House
3

27 January 2016
Fund Snapshot
Gresham House Strategic plc (GHS), previously Spark Ventures plc, is an
AIM-listed investment company that was established in 1999. The company is
managed by Gresham House Asset Management which follows a strategic
public equity investment mandate. The investment manager applies private
equity techniques to public markets and is targeting a 15% IRR over the
medium to long-term. The concentrated portfolio is focused mainly on cashgenerative, UK small-cap firms.
GHS (under its previous name of Spark Ventures) had been in the final stages
of a realisation programme until midway through 2015 when the company
changed both the investment manager and its investment policy in
conjunction with a 14.4m capital raise. The new investment strategy was
formally adopted in August 2015 with the aim of constructing a concentrated
portfolio of influential stakes in listed smaller companies.
The majority of returns are expected to be generated through capital
appreciation. The companys intention is to distribute up to 50% of profits on
realisations through dividends, share buybacks or other returns of capital.
Figure 1: Summary of structure & terms
Corporate Structure
Listing
AIM
Corporate structure
UK-incorporated closed-ended investment company
Investment Manager
Investment manager
Gresham House Asset Management - subsidiary of Gresham House plc
Investment management fee
1.5% of NAV
Performance fee
15% p.a. of the NAV increase above a high water mark (subject to a
compounding 7% preferred return hurdle). Up to 50% of performance fee to
be taken in ordinary shares
Returns
Target IRR
15% (at the asset level)
Distribution policy
Up to 50% of profits on realisations through dividends, share buybacks or

other returns of capital
Other
Company life
Indefinite
Gearing
Borrowing limited to a maximum of 20% of gross assets
Source: Liberum, Gresham House
Under the terms of the new management agreement, GHAM will receive the
following fees:
Management fee 1.5% of NAV.
Performance fee 15% of the NAV increase above a high water mark
subject to a 7% compounding preferred return hurdle. Up to 50% of any
performance fee will be paid in shares. The performance fee will not be
paid until at least one dividend has been paid.
4

27 January 2016
Small cap specialist with PE expertise

Gresham House Asset Management (GHAM) is a wholly owned subsidiary of
Gresham House plc which is one of the oldest companies on the London
Stock Exchange, incorporated in 1857. A new, experienced management
team took charge in December 2014, implementing a new strategy to develop
a specialist asset management group focusing on illiquid and alternative
investments.
Figure 2: Gresham House timeline of key events
GH becomes an investment trust
listed on the full market of the LSE
Gresham House incorporated
1857
1950
1966
New management team appointed
Non-exec chairman
CEO
Strategic development
director
FD
NED
Oct 14
Dec 14
GH appointed investment
manager to Gresham House
Strategic
April 15
July 15
GH joins AIM, placing

to raise 11.5m
GH first listed on market
GHAM established
GH shareholders vote
For change of direction
Source: Liberum
GHAM targets superior returns through a strategic public equity approach

which seeks to exploit inefficient areas of public markets. The investment
team has a track record of long-term absolute returns. The main principals
responsible for GHS are Tony Dalwood and Graham Bird. Tony Dalwood
established the strategic public equity division at Schroder Ventures Group
and launched two LPs and an investment trust (Strategic Equity Capital) with
Graham Bird.
Strong alignment of interests
GHS raised 14.4m in July 2015 through a placing, open offer and asset
swaps in July 2015 at the same time as the companys change of investment
policy. 6.4m (5m in the placing and 1.4m of asset swaps) was provided by
the investment manager with a further 0.4m personally invested by the fund
managers and members of the Investment Committee. The investment
manager is now the largest shareholder in the company with 19.2% of shares
in issue.
5

27 January 2016
Investment Strategy
Investment policy
GHAM is targeting a 15% IRR on investments over the medium to long term
through a strategic public equity approach that employs private equity
techniques in public markets. The manager follows a value-based philosophy
and investments will typically share a number of the following characteristics:
Either cash generative or expected to generate cash within a reasonable
investment horizon
Attractive management track records
Potential for superior risk-adjusted returns (15% IRR target)
Potential for Gresham House to have a competitive advantage and add
incremental value
The portfolio is expected to comprise 10-15 smaller UK* listed companies
with a market cap of less than 250m. A typical holding period is expected to
be three to five years. GHS can also invest up to 30% in private investments.
The investments are expected to be influential block stakes (10-25%) of the
underlying companies.
*The company can invest in European stocks but will typically focus on investment opportunities
in the UK market
Small cap discount creates value opportunity

The investment manager is seeking to exploit inefficiencies in the Small Cap
sector which has a long tail of companies (1,200 companies in the FTSE
Small Cap and AIM universe). Many of these receive little coverage and are
poorly understood in the market.
The UK Small and Mid-Cap sector has been one of the best performing asset
classes globally on both a 10 and 5 year view which should help to drive inflows.
Figure 3: 5 year IMA asset class performance
80
60
40
20
0
Source: Investment Association, Morningstar
6
Global EM
Global EM Bonds
S-T Money Market
Money Mkt
Global Bonds
High Yield
Asia ex-Japan
UK Gilts
Strategic Bond
Corporate Bond
Real Estate
Japan All Cap
Europe ex-UK
Europe All Cap
UK Income
Global Income
UK All Cap
UK Linkers
U.S. SMID
European SMID
Tech & Telcos
U.S. All Cap
Japan SMID
UK SMID
20

27 January 2016
Figure 4: 10 year IMA asset class performance

175
150
125
100
75
50
25
Money Mkt
S-T Money Market
Real Estate
Japan SMID
Japan All Cap
Strategic Bond
Corporate Bond
UK Gilts
Global Bonds
High Yield
Global EM Bond
UK Linkers
UK Income
UK All Cap
Europe ex-UK
Europe All Cap
Global EM
Global Income
U.S. All Cap
Asia ex-Japan
U.S. SMID
UK SMID
Tech & Telcos
European SMID
Source: Investment Association, Morningstar
On a relative basis, Small Cap stocks are cheap as a discount below ~320m
market cap remains even after resource stocks are stripped out. This has not
always been the case as smaller stocks were more expensive in 2006.
Figure 5: Rolling median 12m fwd P/E Largest to smallest (FTSE All-Share then
AIM)
22x
20x
18x
16x
14x
12x
10x
8x
FTSE
100
6x
100bn
FTSE 250
5bn
FTSE
Small Cap
500m
FTSE All Share stocks in mkt cap order
FTSE
AIM All-Share
20m 2bn
50m
AIM stocks in mkt cap order
Source: Liberum, Datastream
Strategic Public Equity (SPE)

The strategic public equity approach to investing has a long-term track record
of superior investment performance when compared to both the FTSE Allshare and smaller company indices. It is based on an approach which
significantly reduces company specific risk within a highly focused portfolio
by applying private equity style techniques and due diligence, including an
investment committee that draws on the expertise of a distinguished and
experienced advisory group with industrial and PE backgrounds.
The manager will seek to provide primary growth and acquisition capital
alongside significant block stakes in smaller public companies.
7

27 January 2016
The private equity techniques applied to investing in public companies ensure

a rigorous and deep understanding of each investment. This sits alongside
an approach of constructive engagement with stakeholders (management,
shareholders, advisers, customers, competitors) and influence in support of a
clear equity value creation plan which results in a de-risking of investment.
This approach invests with a 3-5 year horizon and whilst short-term volatility
exists, the risk to permanent capital should be reduced due to several factors:
Investment philosophy (value-bias)
Private equity style, disciplined diligence process
Significant and constructive engagement with management and influence
A clear equity value creation plan and identified catalysts
Figure 6: Proven capability & extensive SPE experience
Over 130 years

experience of SPE
investment and
corporate advisory
within team and
Investment
Committee
Track record of
strong relative
returns at SVG
and PDFM
Breadth of skills:
Investment
Corporate Advisory
Banking
Private Equity
Gresham House:
Advisory Group broadens and deepens the appraisal process and deal
sourcing
Network bridges public and private markets
Range of skills and experience and Investment Committee enhances DD
process
Source: Gresham House, Liberum
The investment managers private equity approach follows a structured

process of:
1. Sourcing based on analysis of cash flows and value investment philosophy
2. Due diligence depth of research involving multiple stakeholder touch
points
3. Investment committee comprising experienced public & private investment
professionals
4. Catalyst and exit a clear equity value creation plan, monitored through
significant engagement with the company (including potential board
representatives)
8

27 January 2016
Figure 7: SPE investment process: Rigorous ongoing evaluation and engagement

Watch List
Corporate Advisers
M&A Transactions
Investor Community
Cash Flow Screen
Directors Dealings
Yield Drivers Screen
LBO Screen
Investment
Committee
Idea Generation
Investment
Committee
Stage 1
Sourcing
Stage 2
Due Diligence
Stage 3
Equity Value Plan
Stage 4
Catalyst & Exit
Investment
One Pager
Preliminary Investment
Report
Final Investment
Report
Execution
and Exit
Materials
Focus
Involvement of Advisory Group
Credible case for

investment?
Does the company
meet our criteria?
Initial meetings
Management credibility
Company overview
Investment thesis
Cash flow model
LBO model
Stakeholder analysis
Feasibility
Catalyst for value

P-E insights
Counterparty analysis
Due diligence reports
Bespoke research
External research
Management referencing
Commercial, technical
/ other DD
Risk mitigation /
scenarios
Value creation plan
and catalysts
Management support
Peer group review

DD questions
Investment risks
P-E transactions
Target price and IRR
Progress against thesis

Changes to estimates
Investment
Review against thesis every
6 months
Exit strategy
Figure 8: Significant pipeline of opportunities under assessment
Public
Private
1461 - Stocks on FTSE All-share and AIM Allshare Index
P2P Opportunities
490- Stocks trading > 50% below 3yr price high
Pre-IPO
900- Stocks with a Market Capitalisation below

250m
Preferred quasi equity

positions
79 EV/
EBITDA
< 7x
46
Gearing
> 75%
26
ROCE
> 10%
Private Equity houses typically

uncomfortable with public
markets
Profitable companies with organic
and acquisition growth (not ready
for public markets yet)
Convertibles, mezzanine
49 FCF
> 10%
Watchlist
Growth/ Acquisition Capital
Recovery Capital
Strategic &
Opportunistic Improvement
Asset Realisation
M&A Catalyst
Private: Pre-IPO/ P2P/ Quasi

Equity
Liquid Private Equity
Reject
Portfolio
9

27 January 2016
Portfolio
GHSs current portfolio comprises six investments with a total value of 21m.
IMImobile is the only remaining investment that was acquired under the
previous investment manager. Three investments (Miton, Spaceandpeople &
Castle Street) were acquired via asset swaps in August 2015 and GHS also
acquired smaller stakes in Quarto Group and Be Heard towards the end of
the year. The company is well placed to fund acquisitions with cash currently
representing 42% of NAV.
Figure 9: NAV breakdown at 22 January 2016
Holding
IMI Mobile plc
Miton Group plc
Castle Street Investments plc
Be Heard Group
Quarto Group
Total investments
Mkt Cap
71.4m
11.1m
45.5m
63.8m
12.1m
41.0m
Shares % holding
10.5
22%
2.1
11%
5.0
3%
3.5
5%
24.5
6%
0.4
2%
Bid Price
147.0p
55.0p
25.3p
34.0p
3.8p
206.0p
Cash and other net assets

NAV
m % of NAV
15.5
43%
1.1
3%
1.3
4%
1.2
3%
0.9
3%
0.7
2%
20.7
58%
15.2
36.0
Shares
42%
3.7
NAV per share
975.1p
The portfolio is expected to include up to 10 - 15 companies with a market

capitalization of less than 250m.
Figure 10: NAV breakdown by market capitalisation
Figure 11: NAV breakdown by sector

Cash & other net assets
4%
8%
15%
0 - 50m
42%
Investment companies
42%
50 - 100m
43%
Cash & other net assets
43%
Financial services
3%
Software & computer

services
Media
Of the current investment, the only holdings above 10% are IMImobile and
Spaceandpeople. The manager's target range is typically a 10-25%
shareholding and it is therefore likely that a reasonable amount of cash on the
balance sheet will be used to fund follow-on investments in the other portfolio
companies.
Benefit of tax losses
GHS has approximately 150m of accumulated unutilised tax losses. These
tax losses built up over a long period prior to the new manager coming on
board and were one of the reasons the board decided to adopt the strategy
change in 2015. GHS will be able to offset these tax losses against any gains
arising from current or future investments.
10

27 January 2016
IMImobile opportunity for a re-rating

IMImobile is a software and services business that helps corporates engage
with their customers across all mobile devices. The companys product
portfolio is based on a proprietary technology platform (DaVinci), targeting
mobile operators and blue-chip enterprises. IMImobile is headquartered in
London with offices in Hyderabad, Atlanta, Johannesburg and Dubai with 750
employees worldwide.
Figure 12: IMImobile Product Portfolio
IMI Applications
Application products (Applications)
outline the usability, functionality and
consumption models for end users.
IMIcampaign
IMIdigital
IMIconnect platform provides the

software foundation and exposes
functionality upon which services,
applications and solutions are built.
IChat
Textlocal
IMIsocial
IMIconnect Enterprise Cloud Communications Platform

IMIcloud IMI Infrastructure & Enablers
IMIcloud provides the technology

enablers, connectivity and secure,
highly scalable infrastructure upon
which products and solutions run.
Connectivity
Intelligent
Network
Gateways
Payments
Device
Optimisation
Presence &
Location
Voice
Gateway
IP
Messaging
24/7 Global Managed Services Infrastructure

Source: Liberum, IMImobile
The company was founded in 2000 and has been profitable and cashgenerative since inception. IMImobile listed on AIM in 2014 and used part of
the proceeds to fund the acquisition of IMImobile Private Ltd and its
subsidiaries. The business has historically offered its clients one of three
business models: managed service; software as a service (SaaS); or licence
fee. The model is increasingly migrating to SaaS.
Figure 13: Revenue split by region (6 months to 30 September 2015)
India & South East
Asia
13%
Middle East & Africa

27%
Europe and
Americas
60%
Source: IMImobile, Liberum
Recent trading remains robust with a revenue and EBITDA increase in H1

2016 (six months to 30 September 2015) of 29% and 20% respectively.
Operational progress was achieved across all regions and recent acquisitions
are trading in line with expectations. The company has ambitions to grow US
business to c.25% of gross profits (currently c.2%) and will be the focus of
continued investment. IMI's balance sheet is in a strong position with no debt
and 13.5m of cash.
11

27 January 2016
Favourable macro trends

IMImobile is benefitting from a number of technology trends including the
increased level of smartphone penetration and improvements in network
speeds. Mobile is changing the way companies interact with customers and
smartphones are seen as one of the most effective channels of marketing.
The importance of mobile interaction with customers should continue to grow
given the greater mobile usage of younger age groups.
Figure 14: Split of time spent by age group
55+
68%
35-54
16%
45%
18-34
21%
42%
0%
10%
20%
34%
17%
30%
40%
50%
16%
41%
60%
70%
80%
90%
100%
Per cent of time spent

TV
Desktop
Mobile
Source: comScore
Strong revenue visibility

IMImobile has good visibility over revenues (c80% over 12 months) through
both licence income and predictable volumes. The companys EBITDA margin
is currently 19% and it has a scalable platform which could enable the margin
to grow to 25%. The business is also evolving and is focusing on higher
margin services in Western Europe, US and Africa.
The company is trading on a low rating relative to peers in the software and
services sector at 6.2x 2016 EV/EBITDA. The business has not been
particularly well understood by the market and was perceived as an emerging
market play. Management has taken steps to address this by simplifying the
story and improving communication. The rating should improve from the
current level if revenues rise in line with consensus forecasts (21% revenue
CAGR over a two-year period to March 2017).
12

27 January 2016
SpaceandPeople- Recovery potential

SpaceandPeople markets and manages promotional space for marketing
campaigns and retailing in shopping centres and other high footfall locations
(e.g. train stations, theme parks). It offers consumer brands the opportunity
to promote their products through direct engagement with consumers. GHS
holds a 5% stake in SpaceandPeople which was acquired from the manager
by way of an asset swap at a 7% discount to SpaceandPeoples share price.
There are four core divisions to SpaceandPeoples business; UK and
Germany promotions and UK and Germany retail divisions. Additionally, the
company has other ventures through S&P+ and SpaceandPeople India
subsidiaries and a Russian retail licensee.
Figure 15: Revenue split by division (H1 2015)
Other
22%
UK Promo
24%
German Promo
10%
German Retail
21%
UK Retail
24%
Source: Liberum, SpaceandPeople
SpaceandPeoples operating margins are currently well below a normalised

level mainly due to the loss of a large contract in Germany in 2014 (3%
currently vs. 10% normalised). The company has however won a number of
material contracts including a five-year agreement to promote brands across
all Network Rail stations in the UK for five years. SpaceandPeople is also
expanding into new territories with the launch of a new pilot contract with
French shopping centre owner Immochan.
SpaceandPeople currently trades on 2016 EV/EBITDA multiple of 5.6x (based
on consensus numbers) which compares to an average of 10.3x for its peers.
13

27 January 2016
Miton Group Significant operational gearing

Miton Group is an established UK asset management company with assets
under management of 2.8bn (as at 31 December 2015) across OEICs,
investment trusts and segregated mandates. GHS acquired a 3% holding in
Miton Group in 2015 by way of an asset swap with River and Mercantile.
Figure 16: AUM by asset group (30 June 2015)
Figure 17: AUM by type of client (30 June 2015)

Segregated
mandate
12%
Other
7%
UK Bonds
5%
Cash
5%
Investment
Trusts
20%
UK Equities
69%
OEICs
68%
Global
Equities
14%
Source: Miton Group, Liberum
Source: Miton Group, Liberum
2014 was a difficult period for Miton with the company experiencing fund
outflows on the back of poor fund performance and key man departures.
AUM has recovered in 2015 with a rise of 36% in 2015 mainly due to a
repositioning of some funds and an improvement in fund performance.
Mitons UK Value Opportunities Fund strategy has received strong inflows
with AUM of 783m (31 December 2014: 211m). AUM is likely to grow
further with the recent launch of a European equities fund and as the UK
Micro-cap Trust considers a further issue of equity.
Figure 18: Mitons AUM Growth in 2015 (m)
2,350
2,250
2,150
2,050
1,950
Dec-14
Jan-15
Feb-15
Mar-15
AUM excl. performance
Apr-15
May-15
Jun-15
Jul-15
Aug-15
AUM incl. performance
Source: Liberum, Miton
Operational gearing opportunity in scalable business

Mitons operational gearing leaves it well placed to benefit from a rise in net
fund inflows as the company has significant capacity to grow AUM at very
little incremental cost. Management recently guided towards a capacity of
c.5bn based on the existing team. Operating margins are forecast to be 9%
in 2015 compared to 35% for the peer group. Miton has considerable
firepower to support initiatives to boost growth with 14m of cash.
Consensus forecasts indicate 50% EPS CAGR over the next two years. Miton
has de-rated versus its peer group since 2013 and now trades on 10x 2016
earnings on a cash-adjusted basis which compares to c.14x for peers. There
is material upside for the shares as the current enterprise value is equivalent
to only 1.1% of AUM.
14

27 January 2016
Castle Street Investments Buy and build with proven team

Castle Street Investments is an investing company that was established from
the disposal of the online services provider Cupid plc that was sold to Tradax
IP Licensing Ltd for 3m in December 2014. The company has effectively
been a cash shell since then and had a closing cash position at the end of
2015 of 22m with distributable reserves of c.21.5m. Castle Streets strategy
is to invest in businesses sharing the following characteristics: experienced
senior management, good growth opportunities, demonstrated profits,
positive cash flows and good revenue visibility.
On 4 January 2016, Castle Street announced it had agreed to acquire
Selection Services Investments, a UK focused provider of IT solutions and
Cloud services, for an enterprise value of 34.8m. 30m has conditionally
been raised from ordinary shareholders to fund the deal. MXC Capital (a
technology focused bank) is making a strategic investment in Castle Street
and will own 24.9% of the enlarged vehicle. Following the acquisition, Castle
Street will have 16.5m of available cash resources and 9m of undrawn debt
facilities.
Selection has over 500 customers across the UK in the private and public
sector. 65% of the companys revenues are recurring in nature and Selection
has a significant length of tenure with its main clients. Key customers include
Atos, Accenture, Avis, JO Hambro, KPMG and Nuffield Health.
The 34.8m enterprise value reflects a 10.5x multiple of the company's
EBITDA for the 12 months to June 2015. Revenues have risen slightly from
2013 (33.5m) to 2015 (34.5m) and margin improvements have led to a 67%
EBITDA increase over the two year period.
Figure 19: Financial information on Selection
Revenues (m)
EBITDA (m)
EBITDA Margin
2013
33.5
2.0
6.0%
2014
36.3
2.9
8.0%
2015
34.5
3.3
9.6%
Source: Company data
Focus on fragmented IT services sector

The investment in Selection Services offers an opportunity to create a buyand-build platform focusing on IT solutions and cloud services. Castle Street
will now be repositioned as a consolidator within the IT services sector. An
experienced management team has been recruited with Andy Ross (partner in
MXC Capital) coming in as CEO of Castle Street.
The IT services sector is undergoing considerable change with a shift towards
cloud-based technologies and a growing trend for business to outsource all
of their IT requirements. Selection aims to provide a broad range of IT
solutions and cloud services to benefit from these market growth themes.
Selection is also likely to engage in corporate activity given the highly
fragmented nature of the IT services sector.
15

27 January 2016
Be Heard Group organic growth and buy and build

Be Heard Group is a digital marketing company that aims to grow through
acquisition, building a leading network of digital businesses focused on
marketing services, data analytics and e-commerce sectors. The
management team has a track record of value creation in the sector having
founded and sold a number of well-known integrated marketing services and
advertising businesses. The company is led by Executive Chairman Peter
Scott co-founder and former CEO of The Engine Group and former Chairman
and CEO of Aegis Group plc
The company floated at the end of 2014 and recently completed its first
acquisition which was the digital media agency Agenda 21 for 3.3m, plus
deferred consideration of up to 8.6m. Be Heard completed a 5.5m placing
to part fund the deal in November 2015. Agenda 21 was founded in 2005 as a
digital media and analytics agency. It creates multi-channel campaigns
across pay-per-click, natural search, display advertising and other paid
media, underpinned by proprietary analytics. It serves clients across a variety
of industries, including financial services, utilities, B2B and B2C goods and
charities.
BHRD is developing a deal pipeline with a second acquisition targeted for the
first half of 2016. The companys investment targets are companies in the UK
and overseas with an enterprise value up to 50m.
Quarto Group Strong cash generation and buy and build

The Quarto Group is a global illustrated book publisher and distribution group
that was established in 1976 and has been listed on the LSE since 1986. Over
60% of the Quarto's turnover comes from a backlist of over 9,000 titles,
providing a stable revenue stream. The company has over 400 employees
across five businesses Quarto International Co-editions Group, Quarto
Publishing Group USA, Quarto Publishing Group UK, Quarto Hong Kong and
Books & Gifts Direct, Australia & New Zealand.
Quartos recent Q3 update indicates that results are on track to meet
management expectations for FY2015. The company is seeking to reduce net
debt through strong cash generation and expects to make further
improvements in this regard in H2 2015.
The company has the potential to significantly increase its share of publishing
through earnings enhancing acquisitions. The business plans to acquire
smaller niche operators at attractive multiples and deliver growth by
leveraging the distribution and purchasing base of a larger business.
Harwood Capital and the Wellcome Trust recently placed out their
shareholdings representing c.31% of the company. They both had been
relatively active shareholders and had engaged with the management to make
operational and structural improvements. The shares were placed with a
range of institutional investors and should lead to liquidity improvement which
should address c.30% discount to other smaller international publishers.
16

27 January 2016
Forecasts
Our forecasts imply 8.7% NAV CAGR over the period to March 2018. The
high cash weighting (42% of NAV) leads to a large potential for forecasting
error in assessing NAV upside for GHS.
Figure 20: Summary model
No of shares
10.5
2.1
5.0
3.5
24.5
0.4
Investments
IMI Mobile plc
Miton Group plc
Be Heard Group
Quarto Group
Assumed acquisitions
Total investments
22-Jan-16
Bid price
147.0p
55.0p
25.3p
34.0p
3.8p
206.0p
Cash & other net assets (pre-cost accruals)
m
15.5
1.1
1.3
1.1
0.9
0.7
0.0
20.7
31/03/2016
Bid price
147.0p
55.0p
25.3p
34.0p
3.8p
206.0p
15.2
No. of shares
NAV per share (p)
31/03/2017
Bid price
180.0p
90.0p
31.5p
32.5p
3.8p
274.5p
m
19.0
4.5
4.8
2.2
0.9
1.0
4.0
36.4
31/03/2018
Bid price
208.3p
116.9p
34.0p
34.0p
3.8p
274.5p
m
22.0
5.8
5.2
2.2
0.9
1.0
4.0
41.1
10.2
5.2
5.2
0.0
(0.2)
(0.1)
0.0
(0.3)
0.0
(0.3)
0.1
(0.8)
(0.5)
0.0
(1.2)
(0.3)
(1.5)
0.1
(0.8)
(0.6)
(0.3)
(1.6)
(1.5)
(3.1)
36.0
35.7
40.1
43.2
3.7
3.7
3.7
3.7
975p
967p
1087p
1171p
-10.4%
12.4%
7.7%
Adjustments
Dividends received
Operating expenses
Management fee
Performance fee
Total adjustments in the period
Cumulative adjustment from prior periods
Total adjustments
Net assets
m
15.5
1.1
1.3
1.1
0.9
0.7
2.0
25.7
NAV total return

Source: Liberum estimates
Our key assumptions are outlined below:

We have assumed no growth in the portfolio in the period to March 2016.
Our March 2017 forecasts are based on a 10% discount to consensus 12
month target price estimates where available. We apply a 10% discount as
the stocks are typically only covered by a small number of analysts. We
have further adjusted March 2018 forecasts for three portfolio companies
(IMImobile, SpaceandPeople and Miton Group) on the basis of a modest
re-rating for each company.
Figure 21: Underlying portfolio assumptions
Portfolio assumptions
IMI Mobile plc
Miton Group plc
Be Heard Group
Quarto Group
Current price
147.0p
55.0p
25.3p
34.0p
3.8p
206.0p
Mar-17
180.0p
90.0p
31.5p
34.0p
3.8p
274.5p
% Chg
21.6%
55.2%
18.9%
0.0%
0.0%
33.3%
Comment
10% discount to 12 month TP
Unchanged
Unchanged
Mar-18
208.3p
116.9p
34.0p
34.0p
3.8p
274.5p
% Chg
15.7%
29.9%
7.8%
0.0%
0.0%
0.0%
Comment
6x consensus 2017 EV/EBITDA
5x consensus 2017 EV/EBITDA
10x consensus 2017 P/E
Unchanged
Unchanged
Unchanged
Source: Liberum estimates, Bloomberg
We have assumed GHS invests a further 3m in Miton Group, 2m in

SpaceandPeople and 1m in Castle Street. In addition, we believe there is
scope for a further 4m of acquisitions but we have not included any
upside from other acquisitions which acts as a drag on performance.
No tax payable due to the companys 150m of accumulated tax losses.
17

27 January 2016
Valuation
Figure 22: Peer group summary
Gresham House
Strategic
Marwyn Value
Investors
Strategic Equity
Capital
Closed-ended
investment company
Specialist Fund Market
UK Investment Trust
Listing
Closed-ended
investment company
AIM
Ticker
GHS LN
MVI LN
SEC LN
CRS LN
NAS LN
OIG LN
29.7m
-18%
166.5m
-12%
132.0m
-6%
141.9m
-2%
329.4m
-17%
98.7m
-6%
n/a
n/a
-12.2%
7.7%
4.4%
20.0%
3.5%
7.6%
22.1%
17.7%
24.3%
23.1%
n/a
6.5%
17.4%
8.2%
13.6%
18.2%
Marwyn Investment
GVQ Investment
Crystal Amber Asset
Management
Management
Management
2.0% of NAV Lower of 1.0% of NAV or Lower of 2.0% of NAV or
market cap
market cap
Harwood Capital
Harwood Capital
Structure
Market cap
Premium /
(discount) to
NAV
NAV total return track record
1 year
3 year
(annualised)
5 year
(annualised)
Manager
Management
fee
Performance
fee
Dividend policy
Discount
control policy
Maximum
gearing
Current gearing
Gresham House Asset

Management
1.5% of NAV
15% of NAV increase

(subject to 7% preferred
return hurdle
50% of realised profits
n/a
Main Market
20% of NAV increase Performance fee equal

(subject to 7.5% to 15% of NAV increase
preferred return hurdle. over hurdle (FTSE Small
Calculated at Master
Cap + 2%)
Fund level
Minimum of 8.255p per

share (3.9% dividend
yield)
In line with investment

trust requirements
Crystal Amber North Atlantic Smaller

Companies Investment
Trust
Closed-ended
UK Investment Trust
investment company
AIM
Main Market
Oryx International
Growth
Closed-ended
investment company
Main Market
1.0% of NAV Management fee 1.25%

p.a. on first 15m of
NAV, 1% of any excess.
20% of NAV increase 10% of outperformance Discretionary bonus of
over a 7% hurdle
over Sterling adjusted
150,000
Standard & Poor's 500
Composite Index, limited
to 0.5% of
Shareholders' funds.
Proportion of income
from portfolio
n/a
n/a
Introduction of Semi-annual tenders at

Share buyback (up to
realisation share class 10% discount to NAV for 14.99% of share capital) 14.99% of share capital)
up to 4% of shares in
issue

10% of share capital)
20% of GAV
Limit of 40 million
25% of NAV
No gearing
30% of NAV
20% of NAV
0%
0%
0%
0%
0%
0%
4
Up to 25
UK small and mid-cap UK small cap companies
companies
10+
UK small and mid-cap
companies
20+
UK/US small cap
companies
40+
UK small and mid-cap
companies
No. of holdings
6 (Target 10-15)
Investment
UK small cap companies
focus
Source: Morningstar, Bloomberg, Liberum
The investment strategy of GHS sets it apart from the majority of smaller
company funds which typically have highly diversified portfolios. GHS will
have a highly concentrated portfolio of 10-15 companies which will enable the
manager to conduct thorough due diligence and engage with investee
stakeholders (company management teams, shareholders, customers,
suppliers). GHS can also hold up to 30% of the portfolio in unquoted
investments enabling the company to bridge public and private markets.
The peer group in Fig 22 is comprised of funds that similarly have
concentrated portfolios of small cap investments although investment
strategies vary (e.g. region). These funds are trading on an average 10%
discount to NAV (vs. 19% discount for GHS). Our 978p target price assumes
GHS re-rates to a 10% discount to our one year forward NAV forecast.
18

27 January 2016
Appendix 1 Biographies
Fund Manager
Tony Dalwood Chairman
Tony is an experienced investor and adviser to public and private equity
businesses. He established SVG Investment Managers (a former subsidiary of
SVG Capital plc), acted as CEO and chairman of this entity, and launched
Strategic Equity Capital plc. His previous appointments include CEO of SVG
Advisers (formerly Schroder Ventures (London) Limited), membership of the
UK Investment Committee of UBS Phillips & Drew Fund Management (PDFM),
Chair of Downing Active Management Investment Committee and the Board
of Schroders Private Equity Funds. He is currently Chairman of the
Investment Committee and on the Board of the London Pensions Fund
Authority. He is an independent non-executive director of JP Morgan Private
Equity Ltd and an adviser to LDC (regional UK mid-market private equity
house) through Gresham House.
Graham Bird Head of Strategic Investments
Graham leads the strategic public equity strategy alongside Tony Dalwood.
He is experienced in fund management and in building both corporate
advisory and asset management businesses.
Graham has spent the last 6 years as a senior executive at PayPoint plc, most
recently as Director of Strategic Planning and Corporate Development. He
was Executive Chairman and President of PayByPhone, a multi-national
division of PayPoint operating out of Canada, the UK and France between
2010-2014. Prior to joining PayPoint, Graham was a fund manager and Head
of Strategic Investment at SVG Investment Managers where he helped to
establish and then co-manage the Strategic Recovery Fund II and Strategic
Equity Capital Investment Trust. Before joining SVGIM he was a Director in
Corporate Finance at JP Morgan Cazenove.
19

27 January 2016
Investment Committee
Rupert Robinson
Rupert has over 25 years of experience in private wealth and asset
management. He is a former CEO and CIO of Schroders Private Bank and
was instrumental in driving organic growth in AUM which doubled between
2008 and 2012 from 4.5bn to more than 9bn. Prior to Schroders, Rupert
was Head of UK Wealth Management at Rothschild Asset Management.
Bruce Carnegie-Brown
Bruce is currently chairman of Aon UK Ltd and of Moneysupermarket.com
Group plc. He is also a non-executive director of Santander UK plc. He was
previously a managing partner of 3i QPE plc, a managing director of JP
Morgan and CEO of Marsh Ltd.
Tom Teichman
Tom has 30 years of venture capital & banking experience. He founded Spark
in 1995 and he is a former Investment Committee member at Brandts, Credit
Suisse, Bank of Montreal and Mitsubishi Finance London. He is the start-up
investor/director of lastminute.com, mergermarket.com, Chairman of Kobalt
Music, notonthehighstreet.com, ARC, MAID, amongst others. He is an
investor/director in System C Healthcare, Argonaut Games, and World
Telecom.
Advisory Group
The investment team can also draw upon the experience of the Gresham
House plc Advisory Group.
Gareth Davis
Gareth is current the Chairman of Wolseley, William Hill and DS Smith. He is
the former CEO of Imperial Tobacco and Senior Executive at Hanson.
Alan Mackay
Alan is the former Senior Partner and Head of Healthcare at 3i Group plc,
appointed to the board in 1993. He is currently the Managing Partner at GHO
Capital and former CEO of Hermes GPE.
Sir Roy Gardner
Sir Roy Gardner is an adviser to Credit Suisse, current Non-Executive
Chairman of Serco, Senior Independent Director of William Hill Plc and NonExecutive Director of Willis Group Holdings Plc. He is the former Chairman of
Compass Group, Manchester United and CEO of Centrica.
20

27 January 2016
Board of Directors
David Potter Non-Executive Chairman
David is the former Deputy Chairman of Investec Bank UK. Prior to this he
was Group CEO of Guinness Mahon Group. Between 1981-1989, David was
a Managing Director of Samuel Montagu, Midland Montagu and Midland
Global Corporate Banking (now HSBC). David was also a Managing Director
of CSFB and its predecessor companies (1969-1981). David is currently nonexecutive Chairman of Ortus VCT and Quercus Publishing. He is a Council
member of The Centre for the Study of Financial Innovation, Chairman of the
National Film and TV Foundation and a Trustee of the Nelson Mandela
Childrens Fund UK and Worldwide Volunteering. He is a member of the
investment committee of Kings College London where he is a fellow.He was
appointed to the Board on 21 March 2002, and became Chairman on 25th
September 2009.
Helen Sinclair Non-Executive Director
Helen has an MA in Economics from the University of Cambridge and an MBA
from INSEAD Business School. After working in investment banking Helen
spent nearly eight years at 3i plc focusing on MBOs and growth capital
investments. She later co-founded Matrix Private Equity (now Mobeus) in
early 2000 raising Mobeus Income & Growth 2 VCT plc (formerly Matrix eVentures VCT plc). She subsequently became managing director of Matrix
Private Equity before moving to take on a portfolio of non-executive director
roles in 2005. She is currently a non-executive director of The Income &
Growth VCT plc, Mobeus Income & Growth 4 VCT plc, Gresham House
Strategic plc, Downing One VCT plc and OFT 2 Limited and chairs the
investment committees of the Third Sector Loan Fund and the Community
Investment Fund, both part of Social & Sustainable Capital LLP.
Charles Berry Non-Executive Director
Charles was an executive with GHS (previously SPARK) from 2001 to 2005
working as a director at Aspex, Mergermarket, Kobalt, and
Insurancewide.com. He was involved with GHSs investments in Pricerunner
(sold to ValueClick), Safelogic (sold to Jasper Design Automation), and
IntelligentApps (sold to Sage plc). Since leaving his executive role, Charles
has worked at Virgin Group building Virgins mobile phone and related
ventures around the globe, and also at Lloyds Banking Group working on
restructuring the banks customers, and also the Groups Strategy. Charles is
now Corporate Development Director for DST Systems Inc. a US quoted
technology and services business supporting the asset management industry.
He was appointed to the Board on 16 September 2004.
Ken Lever Non-Executive Director
Ken has significant public company experience, most recently as CEO of
Xchanging, between June 2011 and December 2015, having also served as
CFO from October 2010. Ken is a fellow of the Institute of Chartered
Accountants in England & Wales and has held senior executive director roles
in many listed companies including Alfred McAlpine plc, Albright & Wilson plc
and Tomkins plc. Ken was CFO of Numonyx BV in Switzerland from April
2008 to September 2010. Ken is a non-executive director of Vertu Motors Plc,
DAC Beachcroft LLP and F.M. Insurance Company Limited. In addition, from
2007 to 2013, Ken was a Member of the Accounting Council of the Financial
Reporting Council.
21

27 January 2016
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provides investment banking services to the
companies mentioned herein and receives
remuneration thereto.
whether LCL has in the last 12 months led or
comanaged an offer of securities for the
companies mentioned herein.
whether LCL and / or its affiliates held more than
1% of the issued share of the companies
mentioned herein.
whether LCL makes markets in the shares of the
companies mentioned herein.
whether the author of this communication is a
director or officer of any company mentioned
herein,
whether the author or an individual who assisted in
the preparation of this report received or
purchased shares in the companies mentioned
herein prior to a public offering.
Research
Aerospace & Capital Goods
Ben Bourne
+44 (0)20 3100 2275
ben.bourne@liberum.com
Jack OBrien
+44 (0)20 3100 2273
jack.obrien@liberum.com
Agriculture & Chemicals
Adam Collins
+44 (0)20 3100 2075
adam.collins@liberum.com
Sophie Jourdier
+44 (0)20 3100 2072
sophie.jourdier@liberum.com
Lisa De Neve
+44 (0)20 3100 2068
lisa.deneve@liberum.com
Building Materials & Housebuilders
Charlie Campbell
+44 (0)20 3100 2090
charlie.campbell@liberum.com
Consumer Goods
Robert Waldschmidt
+44 (0)20 3100 2274
robert.waldschmidt@liberum.com
Anubhav Malhotra
+44 (0) 20 3100 2197
anubhav.malhotra@liberum.com
Wayne Brown
+44 (0) 20 3100 2082
wayne.brown@liberum.com
Diversified Financials
Justin Bates
+44 (0)20 3100 2274
justin.bates@liberum.com
Daryl Smith
+44 (0)20 3100 2092
daryl.smith@liberum.com
European Capital Goods
Daniel Cunliffe
+44 (0)20 3100 2086
daniel.cunliffe@liberum.com
Ryan Gregory
+44 (0)20 3100 2071
ryan.gregory@liberum.com
FinTech
Cormac Leech
+44 (0)20 3100 2264
cormac.leech@liberum.com
Media
Ian Whittaker
+44 (0)20 3100 2089
ian.whittaker@liberum.com
Annick Maas
+44 (0)20 3100 2093
annick.maas@liberum.com
Ciarn Donnelly
+44 (0)20 3100 2079
ciaran.donnelly@liberum.com
Mining
Richard Knights
+44 (0)20 3100 2087
richard.knights@liberum.com
Ben Davis
+44 (0)20 3100 2083
ben.davis@liberum.com
Alexandre Schmidt
+44 (0)20 3100 2268
Alexandre.schmidt@liberum.com
Oil & Gas
Andrew Whittock
+44 (0)20 3100 2073
andrew.whittock@liberum.com
Equity Sales London

Pharmaceuticals
Naresh Chouhan
+44 (0)20 3100 2095
naresh.chouhan@liberum.com
Roger Franklin
+44 (0)20 3100 2096
roger.franklin@liberum.com
Dominic Rose
+44 (0)20 3100 2098
dominic.rose@liberum.com
Real Estate
David Brockton
+44 (0)20 3100 2243
david.brockton@liberum.com
Kieran Lee
+44 (0)20 3100 2276
kieran.lee@liberum.com
Gareth Phillips
+44 (0)20 3100 2081
gareth.phillips@liberum.com
John Mozley (Specialist Sales)
+44 (0)20 3100 2115
john.mozley@liberum.com
Retail
Tom Gadsby
+44 (0)20 3100 2258
tom.gadsby@liberum.com
Adam Tomlinson
+44 (0)20 3100 2174
adam.tomlinson@liberum.com
SMID Technology & Gaming
Andrew Bryant
+44 (0)20 3100 2277
andrew.bryant@liberum.com
Jason Holden
+44 (0)20 3100 2278
jason.holden@liberum.com
Strategy & Stock Selection
Sebastian Jory
+44 (0)20 3100 2192
sebastian.jory@liberum.com
Support Services & Special Situations
Joe Brent
+44 (0)20 3100 2272
joe.brent@liberum.com
Rahim Karim
+44 (0)20 3100 2271
rahim.karim@liberum.com
Transport & Leisure
Gerald Khoo
+44 (0)20 3100 2195
gerald.khoo@liberum.com
Technology
Janardan Menon
+44 (0)20 3100 2076
janardan.menon@liberum.com
Eoin Lambe
+44 (0)20 3100 2191
eoin.lambe@liberum.com
Alternatives & Funds
Conor Finn
+44 (0)20 3100 2257
conor.finn@liberum.com
Myrto Charamis
+44 (0)20 3100 2266
myrto.charamis@liberum.com
James Bouverat (Specialist Sales)
+44 (0)20 3100 2253
james.bouverat@liberum.com
Anastasia Mikhailova (Specialist Sales)
+44 (0) 20 3100 2259
anastasia.mikhailova@liberum.com
Andrew Davies (Specialist Sales)
+44 (0) 20 3100 2269
andrew.davies@liberum.com
Richard Mawer (Head of Sales)

+44 (0)20 3100 2114
richard.mawer@liberum.com
Edward Blair
+44 (0)20 3100 2117
edward.blair@liberum.com
Bede Bruce-Lockhart
+44 (0)20 3100 2112
bede.bruce-lockhart@liberum.com
Sean Dixon
+44 (0)20 3100 2124
sean.dixon@liberum.com
Tim Mayo
+44 (0) 20 3100 2127
tim.mayo@liberum.com
David Parsons (Head of Equities)
+44 (0)20 3100 2125
david.parsons@liberum.com
Tajender Sandhu
+44 (0)20 3100 2238
tajender.sandhu@liberum.com
UK Small & Mid Cap

Jeremy McKeown
+44 (0)20 3100 2248
jeremy.mckeown@liberum.com
Julian Collett
+44 (0)20 3100 2113
julian.collett@liberum.com
Archie Soames
+44 (0)20 3100 2193
archie.soames@liberum.com
Natalia Lipecka
+44 (0)20 3100 2097
natalia.lipecka@liberum.com
Private Wealth Services
Katherine Burgdorf
+44 (0)20 3100 2235
katherine.burgdorf@liberum.com
Sebastian Fernandez
+44 (0)20 3100 2242
sebastian.fernandez@liberum.com
Tom Saunders
+44 (0)20 3100 2249
tom.saunders@liberum.com
Equity Sales New York

Mark Godridge
+1 212 596 4823
mark.godridge@liberum.com
Sarah Port
+1 212 596 4818
sarah.port@liberum.com
Julian Plant
+1 212 596 4824
julian.plant@liberum.com
Daniel Kraus
+1 212 596 4812
daniel.kraus@liberum.com
John Churchill
+1 212 596 4807
john.churchill@liberum.com
Sales Trading
Nina Dixon
+44 (0)20 3100 2109
nina.dixon@liberum.com
Stephen Jury
+44 (0)20 3100 2107
stephen.jury@liberum.com
Nick Worthington
+44 (0)20 3100 2106
nick.worthington@liberum.com
Peter Leather
+44 (0)20 3100 2119
peter.leather@liberum.com
David Thompson
+44 (0)20 3100 2062
david.thompson@liberum.com
Sean McGovern
+44 (0)20 3100 2110
sean.mcgovern@liberum.com
Harry Preece
+44 (0)20 3100 2118
harry.preece@liberum.com
Scott Leslie
+1 212 596 4813
scott.leslie@liberum.com
Trading
Dominic Lowres
+44 (0)20 3100 2103
dominic.lowres@liberum.com
Tom Camburn
+44 (0)20 3100 2065
tom.camburn@liberum.com
Peter Turner
+44 (0)20 3100 2170
peter.turner@liberum.com
Simon Warrener
+44 (0)20 3100 2108
simon.warrener@liberum.com
Convertibles
Simon Smith
+44 (0)20 3100 2171
simon.smith@liberum.com
Richard Tomblin
+44 (0)20 3100 2172
richard.tomblin@liberum.com
Market Making
STX 77440
+44 (0)20 3100 2200
Liberum Capital Limited / Ropemaker Place, Level 12, 25 Ropemaker Street, London, EC2Y 9LY / T +44 (0)20 3100 2000 / F +44 (0)20 3100 2299 / www.liberum.com
Authorised and regulated by the Financial Conduct Authority / Registered in England & Wales No. 5912554

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BUY

UK | Equity Funds | GHS LN | Market Cap 29m | 27 January 2016

Gresham House Strategic Initiation

+44 (0) 20 3100 2257

Target price 978p

+44 (0) 20 3100 2266

Gresham House Strategic is an AIM-listed investment

The fund managers have a proven

IMImobile (43% of NAV) offers

Strategic public equity

The value-oriented strategy ensures a

GHS trades on a 19% discount to

Summary financials & valuation (m)

2015A 2016E 2017E 2018E

Valuation (FY - Mar. 2015A 2016E 2017E 2018E

Small cap discount - 12m forward P/E by free float bands

Average 12m Forward P/E

FTSE Small Cap

Average market cap (m)

Source: Liberum, Datastream

Gresham House Strategic Initiation

Gresham House Strategic Initiation

Gresham House Strategic is a closed-end investment

Upside from existing portfolio

c.150m of tax losses from legacy business

Dependence on key executives

Rigorous investment process

Illiquidity of underlying investments

Manager's long-term track record

29m mkt cap - share illiquidity

Strong alignment of interests

Potential for cash drag

Small cap valuation discount

Portfolio sector exposure (22 Jan 2016)

IMI Mobile plc

Cash and other net

Change Impact on NAV

How the target price is generated

Average discount of listed peers

Peer group valuation

Prem / (Disc) to NAV

Source: Liberum, Bloomberg, Gresham House

Gresham House Strategic Initiation

UK-incorporated closed-ended investment company

Gresham House Asset Management - subsidiary of Gresham House plc

Investment management fee

15% (at the asset level)

Up to 50% of profits on realisations through dividends, share buybacks or

Borrowing limited to a maximum of 20% of gross assets

Source: Liberum, Gresham House

Gresham House Strategic Initiation

Small cap specialist with PE expertise

Gresham House incorporated

New management team appointed

GH joins AIM, placing

GH first listed on market

GHAM targets superior returns through a strategic public equity approach

Gresham House Strategic Initiation

Small cap discount creates value opportunity

Source: Investment Association, Morningstar

S-T Money Market

Japan All Cap

Europe All Cap

Tech & Telcos