Independence for Gresham

The UK-based private equity house has completed its most important transaction to date, spinning itself out from Zurich Financial Services in a management-led buyout.

Gresham, the UK mid-market investor, has won independence from its parent-company Zurich Financial Services as it seeks to raise money from third-party institutions.

Zurich has agreed to commit £265m of funds under management to the new vehicle, which will continue the firm’s previous strategy of providing development capital to firms valued in the £5m to £75m bracket.

Gresham chief executive Paul Marson-Smith, who led the buyout, said he was very pleased to complete the buyout. “Independence allows us to broaden our financial base by raising additional capital from outside the Zurich group. Subject to approval from the FSA, we hope to commence fundraising in Spring 2003.” He added that the firm had not yet set a fundraising target.

Zurich has been under pressure to reshape its strategy for some time, following a sequence of poor results. Last week the firm announced it would focus on core insurance businesses as part of cost-cutting proposals that would save $1bn and reduce the firm’s workforce by 4,500. Sandy Leitch, chief executive of Zurich UKISA, said: 'This transaction enables us to continue to benefit from the expertise of Gresham's successful management team…while concentrating on our core business.'

Gresham became a wholly-owned subsidiary of Zurich Financial Services Group in 1998 following Zurich's acquisition of British American Financial Services group. Since 1998, the firm has completed 45 exits worth over £140m, or double the original investment.