Livingbridge sells VCT business to Gresham House for £30m

The acquisition will include the Baronsmead VCTs alongside two open-ended vehicles, LF Livingbridge UK Micro Cap Fund and LF Livingbridge UK Multi Cap Income Fund. The Baronsmead and Equity Funds business manages around £500m in quoted and unquoted investments; it generated unaudited EBITDA and profit before tax of £5m (excluding performance fees) on revenues of £9.1m in 2017. 

Gresham House has agreed to pay £30m for the acquisition, although a further consideration of up to £10m in cash and ordinary shares will be payable subject to the business achieving certain performance targets over a three-year period. Completion is expected on 30 November.

Livingbridge will receive £7m in shares in Gresham House as part of the transaction, in what the PE house stated will establish a long-term relationship between the two businesses. Both firms have committed to a multi-year transitional support agreement to pass on ideas and best practice, and Livingbridge partners involved on the VCT side will also continue as consultants to Gresham House for up to three years in order to provide continuity.

Livingbridge's VCT business currently counts 16 employees, comprising eight investment professionals alongside eight distribution, financial and operational staff. All of them will transition to Gresham House's offices in Cheapside, London.

Baronsmead was one of the first VCTs to be established in 1995, while the firm added the Equity Funds business to its stable in 2009. Livingbridge stated it decided to step away from these activities in order to better focus on its core private equity funds business.

Livingbridge has seen strong growth in AUM for its core buyout business in recent years. Its current flagship fund, Livingbridge 6, reached a final close on £660m in 2016 while its predecessor raised £360m in 2012. The firm also manages a separate fund for smaller investments, Enterprise 2, which closed on £220m in 2015.

Meanwhile, traditional VCT managers in the UK have also expanded into closed-ended buyout funds in the past two years following increasing restrictions on investment parameters for VCTs. YFM Equity Partners held a final close for its maiden closed-ended buyout fund, YFM Equity Partners 2016, on £45m in May 2017. Mobeus Equity Partners held a final close for its maiden institutional fund, Mobeus Equity Partners IV, on £166m in mid-2017. Earlier this year, NVM Private Equity inked the first deal from its maiden institutionally backed fund, NVM Private Equity Vintage III - the fund has held a first close and has a target of £150m.

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