Gresham House — Resilience confirmed as growth continues

Gresham House (LSE: GHE)

Currency in GBP

Last close As at 03/02/2023

GBP7.55

−2.00 (−0.26%)

Market capitalisation

GBP287m

Research: Financials

Gresham House — Resilience confirmed as growth continues

Gresham House continues to develop its alternative asset management activities with a long-term view, but in the near term its exposure to real assets, long-term fund structures and a sustainability focus mean it is well-positioned to weather current challenging equity market conditions. This is evident in strong H122 results, while the longer-term growth potential remains in place and the group is on track to match or exceed its five-year plan targets.

Andrew Mitchell

Written by

Andrew Mitchell

Director, Financials

Financials

Gresham House

Resilience confirmed as growth continues

H122 results

Financial services

16 September 2022

Price

806p

Market cap

£308m

Net cash (£m) at end-June 2022

28.1

Shares in issue

38.3m

Free float

90%

Code

GHE

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.1)

(9.9)

(12.4)

Rel (local)

(0.3)

(9.7)

(11.5)

52-week high/low

1005p

765p

Business description

Gresham House is a specialist alternative asset manager focused on sustainable investments with strategies in public and private equity and real assets including forestry, renewable energy, battery storage, housing and sustainable infrastructure. At end-June 2022 AUM stood at £7.3bn.

Next events

Capital markets day

Nov 2022

Year-end update

Dec 2022 (est)

Analyst

Andrew Mitchell

+44 (0)20 3681 2500

Gresham House is a research client of Edison Investment Research Limited

Gresham House continues to develop its alternative asset management activities with a long-term view, but in the near term its exposure to real assets, long-term fund structures and a sustainability focus mean it is well-positioned to weather current challenging equity market conditions. This is evident in strong H122 results, while the longer-term growth potential remains in place and the group is on track to match or exceed its five-year plan targets.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/21

70.4

20.2

49.3

10.0

16.3

1.2

12/22e

76.6

25.9

52.1

13.5

15.5

1.7

12/23e

84.7

31.0

58.6

17.0

13.8

2.1

12/24e

95.6

37.1

67.1

24.0

12.0

3.0

Note: *PBT and EPS (diluted) are adjusted, excluding performance fees, realised gains, amortisation and depreciation, exceptional items and share-based payments related to acquisitions.

H122: Strong organic growth

As reported in July, first-half fund-raising was resilient and in H122 overall assets under management (AUM) increased 11% to £7.3bn. This included organic growth of £0.5bn (+8%), within which there were net inflows (£0.4m) in all sections of the business, including public equity. While performance in Strategic Equity was affected by lower equity markets, this was more than offset by valuation gains in Real Assets. Compared with H121, net core income increased by 61% to £37.2m and adjusted operating profit was up 91% to £13.2m. Excluding the impact of acquisitions completed in H221 (Mobeus and Appian Asset Management), revenues grew by 26% and adjusted operating profit by 41%. After amortisation and depreciation, acquisition related share-based payments, exceptional items, net gains/losses on investments and other items, reported profit before tax was £3.2m versus £6.2m.

Full-year expectations maintained

While acknowledging the difficult macroeconomic background, Gresham House expects to achieve adjusted operating profit at least in line with market expectations for FY22. It is on track to make further progress on its five-year strategy, GH25, benefiting from exposure to investment strategies expected to see long-term growth, a strong current list of potential investors and the scope to make further balance-sheet investments to support growth. Our estimates are little changed.

Valuation

Year to date, the shares are down 11% but have shown greater resilience than many of the European and North American peers, reflecting the progress evident in H122. Our comparison table (see Exhibit 5) shows Gresham House trading below European and North American peer averages on P/E multiples and in terms of EV/EBITDA.

H122 results: AUM up 11%, operating profit up 91%

During H122, AUM increased by 11% to £7.3bn. As shown in Exhibit 1, there were net inflows in all areas totalling £367m. Strategic Equity performance was negative, reflecting lower equity market levels, but positive performance in Real Assets more than offset this, pointing to the potential these asset classes have to provide diversification. The acquisition of Burlington Real Estate, an Irish commercial property asset management and development company, added £243m to AUM. As noted earlier, organic growth (net flows and performance) was equivalent to 8% of opening AUM, demonstrating that, thus far, investor demand for Gresham House’s specialist asset management strategies has been resilient.

Exhibit 1: Analysis of assets under management

(£m)

H121

AUM

H221

AUM

Net fund flows

Performance

Funds acquired/won

H122

AUM

% change v H121

% change v H221

Public equity

965

1,037

43

(136)

944

(2.2)

(9.0)

Private equity

477

887

25

(88)

825

72.9

(7.0)

Strategic equity total

1,442

1,924

68

(224)

1,769

22.6

(8.1)

Forestry

1,985

2,954

78

260

3,291

65.8

11.4

New energy and sustainable infrastructure

928

1,213

198

95

1,505

62.2

24.1

Real estate

367

448

23

(2)

243

712

94.0

59.0

Real assets total

3,280

4,615

299

352

243

5,508

67.9

19.4

Total

4,722

6,539

367

128

243

7,277

54.1

11.3

Source: Gresham House

Exhibit 2 provides an analysis of the H122 P&L compared with the prior two half-years. Gross core income increased by 63% compared with H121, slightly ahead of the increase in average AUM of 59%, reflecting a modestly richer fee margin mix with the overall average equivalent to 111bp compared with 106bp.

Adjusted administration overheads, as shown below, were up 48% versus H121, with part of the increase arising from the Mobeus, Appian and Burlington acquisitions. The headcount has increased by 67 since end-H121, including 52 added through the acquisitions, taking the total to 205. Adjusted operating profit was up 91% or on like-for-like basis excluding last year’s acquisitions, 41% ahead. The operating profit margin was 35% versus 30% in H121 and the group continues to target an EBITDA margin of at least 40% by the end of its GH25 plan while still balancing investment to support growth and reaching financial targets.

Looking at the section of the table reconciling adjusted to reported operating profit before tax, the larger changes from H121 were: (1) amortisation and depreciation increased as a result of acquisitions and the related management contract amortisation; (2) exceptional items were also higher reflecting acquisition-related costs; and (3) the greatest difference was in gains and losses on balance-sheet investments where market-related valuation movements resulted in a £4.8m swing from a gain to a £1.5m unrealised loss. These non-cash or in some cases potentially temporary items left a reported pre-tax profit of £3.2m versus £6.2m.

Turning to the balance sheet, period-end cash stood at £28.1m and the group has an unused £20m revolving credit facility. Including investments in tangible and realisable assets, total cash and liquid assets stood at £69.7m so the group has significant capacity to invest to support growth in AUM.

Net cash generated from operations during the half year was £5.9m. Net investments of £10.8m were made in battery storage projects and a net £3m in funds. Deferred consideration paid and the Burlington acquisition together amounted to £7.5m while £11.8m was realised from the sale of the investment in Rockwood Realisation (formerly Gresham House Strategic). Payment of the FY21 dividend and the settlement of share-based payments absorbed £3.8m each. Spending on fixed and intangible assets and other smaller items accounted for a further £0.9m. This left a net cash outflow of £12.2m.

Exhibit 2: H122 P&L analysis

£’000s unless indicated

H121

H221

H122

% change

v H121

% change

v H221

Gross core income

23,648

39,697

38,526

62.9

-2.9

Rebates, distribution and fundraising costs

(611)

(1,125)

(1,345)

120.1

19.6

Net core income

23,037

38,572

37,181

61.4

-3.6

Administration overheads (ex depreciation, amortisation, exceptionals & acquisition-related share-based payments)

(16,041)

(25,087)

(23,751)

48.1

-5.3

Finance costs

(102)

(209)

(278)

172.5

33.0

Adjusted operating profit/(loss)

6,894

13,276

13,152

90.8

-0.9

Performance fees net of costs

415

1,299

0

Realised gains net of costs

88

1,685

(260)

Adjusted operating profit incl. performance fees and realised gains

7,397

16,260

12,892

74.3

-20.7

Reconciliation to reported pre-tax operating profit

Amortisation and depreciation

(4,191)

(5,284)

(6,092)

45.4

15.3

Acquisition-related share-based payments

(253)

(814)

(217)

-14.2

-73.3

Exceptional items

(102)

(3,113)

(495)

385.3

-84.1

Net gains/(losses) on investments and other fair value movements

3,305

2,919

(1,456)

-144.1

-149.9

Other

0

196

(201)

Reported operating profit/(loss) before tax

6,156

10,164

3,188

-48.2

-68.6

Taxation

(908)

(3,199)

(1,257)

Profit/(loss) from discontinued operations

(5)

(9)

(3)

-40.0

-66.7

Foreign exchange movement on translation of foreign subsidiary

0

(158)

237

Total comprehensive net income

5,243

6,798

2,165

-58.7

-68.2

Non-controlling interest

(23)

(241)

(12)

-47.8

-95.0

Net income attributable to equity holders

5,220

6,557

2,153

-58.8

-67.2

Basic EPS (p)

16.2

18.6

5.7

-65.0

-69.5

EPS - diluted (p)

15.3

17.5

5.3

-65.0

-69.4

Adjusted, diluted EPS (p)

16.8

32.2

26.9

59.8

-16.5

Dividend per share (p)

10.0

Source: Gresham House, Edison Investment Research

Estimate changes and assumptions

Exhibit 3 makes clear that our estimates are little changed following the H122 results.

Exhibit 3: Estimate changes

 

Revenue (£m)

Adjusted pre-tax operating profit (£m)

Adjusted EPS (p)

DPS (p)

 

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

Old

New

% chg.

03/22e

74.2

76.6

3%

25.9

25.9

0%

52.1

52.1

0%

13.50

13.50

0%

03/23e

84.4

84.7

0%

30.8

31.0

1%

58.6

58.6

0%

17.00

17.00

0%

12/24e

95.3

95.6

0%

36.8

37.1

1%

67.1

67.1

0%

24.00

24.00

0%

Source: Edison Investment Research

We set out our key estimate assumptions in Exhibit 4. We assume AUM increases to c £9.8bn by 2024 with an asset management fee rate maintained at around 100bp in that year. The group reports a good pipeline of potential clients and the current difficult equity market conditions appear to have had a smaller impact on the sort of specialist asset management categories that Gresham House operates in. Morningstar has reported that first-half flows into sustainable funds, for example, have been more resilient than funds as a whole. This is borne out in the flows seen at Gresham House in the first half, while the group continues to see good growth prospects and capacity across its strategies.

In line with the GH25 target, our operating margin is assumed to reach 40% in 2024. Details of the strategic and financial targets of the GH25 five-year plan (ending in 2025) are set out in our May 2022 initiation note.

We have not assumed any performance fees or realised gains in our estimates and these could create added value over the long term. Likewise, in estimating reported profit (see the lower section of table) we do not include any exceptional items or net gains or losses on investments.

Further details of our estimates are shown in the financial summary (Exhibit 7) including our assumed dividend payments for the next three years, with cover in 2024 matching the group’s 3x objective (using adjusted earnings).

Exhibit 4: Key P&L assumptions and reconciling adjusted to reported profit

£’000s unless indicated

FY21

FY22e

FY23e

FY24e

Performance (£m)

777

183

291

332

Net flow (£m)

1,791

770

750

890

Total AUM change (£m)

2,568

953

1,041

1,222

End year AUM (£m)

6,539

7,492

8,533

9,756

Asset management income

62,162

74,311

82,783

93,712

Other income

1,183

1,182

1,882

1,882

Gross core income

63,345

75,493

84,665

95,594

Rebates, distribution and fundraising costs

(1,736)

(2,351)

(2,312)

(2,617)

Net core income

61,609

73,142

82,353

92,977

Administration overheads (ex depcn, amort, excpnls & acqn-related SBP)

(41,128)

(46,733)

(50,931)

(55,428)

Finance costs

(311)

(478)

(400)

(400)

Adjusted operating profit

20,170

25,930

31,022

37,149

Adjusted operating profit margin (%)

33

35

38

40

Performance fees net of costs

1,714

0

0

0

Realised gains net of costs

1,773

(260)

0

0

Adjusted operating profit including performance fees and realised gains

23,657

25,670

31,022

37,149

Reconciliation to reported pre-tax profit:

Net non-core activity

38

0

0

0

Amortisation and depreciation

(9,475)

(13,242)

(14,123)

(13,965)

Acquisition-related share-based payments

(1,067)

(434)

(1,000)

(1,000)

Exceptional items

(3,215)

(495)

0

0

Net gains/(losses) on investments and other items

6,224

(1,456)

0

0

Add back FX movement on translation of foreign subsidiary

158

0

0

0

Reported pre-tax profit

16,320

10,043

15,899

22,184

Source: Gresham House, Edison Investment Research

Valuation

While the Gresham House shares are down 11% year to date, they have shown much greater resilience than the European and North American peers on average (down 29% and 26% respectively), reflecting the progress evident in H122. Gresham House shares nevertheless trade below the European and North American peer-average P/Es and EV/EBITDA multiples (but reflecting its different exposures and growth profile, well above the more traditional UK asset manager average).

Exhibit 5: Asset management comparators

Price
(p)

Market cap (£m)

P/E 2022e
(x)

P/E 2023e
(x)

Dividend yield (%)

EV/EBITDA 2022e (x)

Gresham House

806

308

15.5

13.8

1.3

10.0

Antin Infrastructure Partners

27

4,086

49.4

26.6

0.3

30.9

Bridgepoint

249

2,042

19.4

14.7

N/A

17.7

EQT

24

20,604

31.2

19.9

1.1

27.8

Foresight

412

477

15.2

11.8

N/A

11.1

Impax Asset Management

586

774

14.8

14.3

3.5

10.9

Intermediate Capital

1,218

3,525

10.1

9.6

6.2

15.9

Partners

84,206

22,504

24.2

19.3

3.5

21.1

Petershill Partners

218

2,493

9.9

8.0

N/A

N/A

Tikehau Capital

2,175

3,808

13.2

13.0

2.4

11.0

Average

20.8

15.3

2.8

18.3

North American peer average*

17.0

14.9

1.9

20.7

UK asset managers average**

10.0

10.1

8.8

5.1

Source: Refinitiv, Edison Investment Research. Note: Priced at 15 September 2022. *Ares, Brookfield, Carlyle, Hamilton Lane, KKR, StepStone. **Ashmore, City of London, Jupiter, Liontrust, Man Group, Polar Capital, Schroders.

Exhibit 6 shows the range of values implied when we put Gresham House shares on peer group multiples for 2022e, those implied by transactions involving comparator companies and finally the range indicated by our discounted cash flow (DCF) model, assuming a 3% long-term growth rate and discount rates between 8% and 17%.

Exhibit 6: Valuation ranges based on peers, transactions and DCF

Source: Edison Investment Research, Refinitiv. Note: Peer multiples for 2022e. The markers show average values and, for the DCF valuation, the value at a discount rate of 10%.

Exhibit 7: Financial summary

December (£'000s unless indicated)

2018

2019

2020

2021

2022e

2023e

2024e

PROFIT & LOSS

Asset management income

13,717

31,427

40,304

62,162

74,311

82,783

93,712

Dividend, interest and other income

781

357

1,632

2,038

2,282

1,882

1,882

Performance fees

0

1,944

0

6,163

0

0

0

Total income

14,498

33,728

41,936

70,363

76,593

84,665

95,594

Administrative overheads

(14,608)

(34,331)

(42,052)

(60,116)

(65,328)

(68,366)

(73,010)

Net operating profit/(loss) before exceptional items

(110)

(603)

(116)

10,247

11,265

16,299

22,584

Finance costs

(42)

(390)

(25)

(311)

(478)

(400)

(400)

Exceptional items

(2,001)

(1,063)

(1,775)

(3,215)

(495)

0

0

Share of associates’ profits/(losses)

1,718

246

158

4,955

(203)

0

0

Gains and losses on investments held at fair value

(271)

3,048

4,599

5,842

(945)

0

0

Movement in fair value of contingent consideration

(209)

(2,065)

(1,163)

(1,659)

(840)

0

0

Other

40

0

224

461

295

0

0

Operating profit/(loss) before taxation

(875)

(827)

1,902

16,320

8,599

15,899

22,184

Taxation

218

(23)

(1,084)

(4,107)

(2,339)

(3,751)

(5,546)

Discontinued operations and FX movements

11

55

(12)

(172)

(3)

0

0

Total comprehensive income

(646)

(795)

806

12,041

6,257

12,148

16,638

Non-controlling interest

(53)

(55)

(229)

(264)

(24)

(24)

(24)

Net income attributable to equity holders

(699)

(850)

577

11,777

6,233

12,124

16,614

Adjusted core operating profit

Net core income

14,709

31,724

40,774

61,609

73,142

82,353

92,977

Operating expenses (excl. dep'n and amortisation)

(11,705)

(21,047)

(28,690)

(41,128)

(46,733)

(50,931)

(55,428)

EBITDA (adjusted)

3,004

10,677

12,084

20,481

26,408

31,422

37,549

Finance costs

(42)

(390)

(25)

(311)

(478)

(400)

(400)

Adjusted operating profit/(loss)

2,962

10,287

12,059

20,170

25,930

31,022

37,149

EPS - diluted (p)

(3.9)

(3.2)

1.8

32.6

15.4

29.9

40.0

Adjusted, diluted EPS

14.7

31.2

32.9

49.3

52.1

58.6

67.1

Dividend per share (p)

3.0

4.5

6.0

10.0

13.5

17.0

24.0

BALANCE SHEET

Non-current assets

83,353

78,165

80,339

126,143

107,901

95,280

82,841

Intangible assets

65,911

58,545

59,970

95,012

86,803

74,627

62,451

Tangible fixed assets

332

813

1,090

2,927

2,256

1,811

1,548

Investments

17,032

18,807

18,228

25,515

16,152

16,152

16,152

Other

78

0

1,051

2,689

2,690

2,690

2,690

Current Assets

21,703

46,187

46,767

94,174

107,656

125,768

147,250

Trade receivables

2,628

5,334

3,184

11,135

11,560

11,560

11,560

Cash and cash equivalents

13,958

19,432

21,886

40,252

40,600

58,712

80,194

Assets held for sale (property then battery storage projects)

0

12,188

7,363

17,545

29,831

29,831

29,831

Other

5,117

9,233

14,334

25,242

25,665

25,665

25,665

Current liabilities

6,085

24,928

20,852

50,220

43,472

43,472

43,472

Trade and other payables

4,085

15,210

18,780

42,721

32,606

32,606

32,606

Liabilities of disposal group held for sale

2,000

9,718

2,072

7,499

10,866

10,866

10,866

Non-current liabilities

19,231

8,605

8,976

22,560

21,552

16,252

11,352

Long-term borrowings

7,840

5,973

5,749

0

0

0

0

Other creditors

11,391

2,632

3,227

22,560

21,552

16,252

11,352

Net Assets

79,740

90,819

97,278

147,537

150,533

161,323

175,267

Minority interests

527

582

811

1,075

1,099

1,123

1,147

Net assets attributable to ordinary shareholders

79,213

90,237

96,467

146,462

149,434

160,200

174,120

Diluted NAV per share (p)

289.3

288.2

287.4

366.6

370.1

396.7

431.2

ROCE (%)

20.6

14.6

16.0

34.1

17.0

20.6

23.0

CASH FLOW

Net operating cash flow

905

9,203

15,711

19,975

18,309

30,071

34,403

Acquisitions and deferred consideration

(11,855)

0

(17,887)

(1,736)

(7,501)

(5,300)

(4,900)

Purchase of management contracts

(23,000)

0

0

0

0

0

0

Net sale/(purchase) of investments

(3,906)

(797)

2,025

(1,122)

(3,018)

0

0

Net proceeds of sale of investment properties

4,685

0

0

0

0

0

0

Net investment in DevCo projects

0

(1,510)

4,406

(8,247)

(10,835)

0

0

Net purchase of fixed and intangible assets

(242)

(531)

(736)

(1,045)

(1,478)

(1,501)

(1,526)

Other

(1,768)

53

186

2,514

11,754

0

0

Cash flow from investing activities

(36,086)

(2,785)

(12,006)

(9,636)

(11,078)

(6,801)

(6,426)

Dividends

0

(795)

(1,351)

(1,881)

(3,815)

(5,158)

(6,495)

Share issuance (net)

25,679

6,487

7,663

20,487

0

0

0

Share warrants issued/exercised

3,841

4,859

182

0

0

0

0

Share-based payments settled

0

(833)

(7,125)

(9,734)

(3,818)

0

0

Other financing activities

1,994

(8,795)

(396)

4,904

(135)

0

0

Cash flow from financing activities

31,514

923

(1,027)

13,776

(7,768)

(5,158)

(6,495)

Increase/(decrease) in net cash

(3,667)

7,341

2,678

24,115

(536)

18,112

21,482

Closing net cash/(debt)

6,118

13,459

16,137

40,252

39,716

57,828

79,310

Source: Source: company reports, Edison Investment Research. Note: *Return on capital employed (ROCE) = adjusted operating profit + net performance fees + net development gains divided by opening net assets adjusted for share issuance during the year.

General disclaimer and copyright

This report has been commissioned by Gresham House and prepared and issued by Edison, in consideration of a fee payable by Gresham House. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Gresham House and prepared and issued by Edison, in consideration of a fee payable by Gresham House. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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