Another week, another takeover – this time it is alternative asset manager Gresham House (GHE:AIM), which is being bought by private equity firm Searchlight for £470 million.

At £11.05 per share, 63% above the previous closing price and 10% above the all-time high a year ago, the purchase price represents an enterprise value of almost 16 times last year’s earnings before interest, tax, depreciation and amortisation.

To put that in perspective, the average 2023 valuation for quoted European alternative asset managers is closer to 12 times EV/EBITDA according to analyst Tom Mills and the financials team at US broking firm Jefferies.

Moreover, Searchlight is paying close to 6% of Gresham House’s assets under management which is double the usual take-out multiple for traditional asset managers in the past.

Searchlight says it is ‘attracted by Gresham House’s position as one of the UK’s leading asset managers in sustainable alternative asset classes’ and sees ‘significant potential from supporting Gresham House to make further bolt-on and potentially transformational transactions across asset classes and internationally’.

Meanwhile, Gresham House directors have recommended the deal to investors as it provides ‘certainty’ against a backdrop of ‘the risks and uncertainties of the current market environment’.

There’s no doubt both directors and minority shareholders will have been frustrated at the divergence between the group’s ‘consistently strong’ trading performance and the lacklustre performance of its shares, which were languishing at 680p last week, down 10% on the year.

They aren’t alone, however. While some investors are sitting pretty – step forward anyone owning 3i Group (III), Abrdn (ABDN) or Man Group (EMG) – shares in most asset managers, alternative as well as traditional, are in the red this year.

Moreover, as the table shows, only three firms are trading on a double-digit forward EV/EBITDA multiple and two of those are barely above 10-times whereas the majority of firms are in the mid-single-digits.

That compares with an average of 10.9-times for US traditional asset managers (or 13.9-times on a market-cap weighted basis) and 21.6-times for US alternative asset managers (or 22.6-times market-cap weighted).

UK asset managers also offer big dividends, with Ashmore (ASHM) yielding 8.6%, Ninety One (N91) 7.2%, Abrdn 6.6% and Jupiter (JUP) 6.1%, compared with an average yield of 4.1% (or 3.3% market-cap weighted) on US traditional managers and 2.9% (2.3% market-cap weighted) on alternative managers.

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