The deal comes as part of Gresham House's growth drive in the alternatives space.

Gresham House Asset Management, part of London-listed Gresham House, has been appointed to manage LMS Capital's £92 million ($121 million) asset portfolio, with LMS becoming a “significant” shareholder in the company.

The LMS portfolio, which includes small to medium-sized private and public companies in the consumer, energy and business services sectors, will be managed by GHAM’s strategic equity investment team, led by Graham Bird and Tony Dalwood.

LMS will aim to provide an income yield to shareholders over the longer term while also allowing new investors to access the strategy. Gresham House will target the strategy, including deal by deal co-investment opportunities, at family offices, ultra-high net worth individuals and institutional investors.

LMS intends to buy ordinary shares and warrants to subscribe for up to 1,379,409 ordinary shares, subject to shareholder approvals. Gresham House has already agreed to issue 332,484 new ordinary shares at £1 million, with further new ordinary shares to be issued on the second anniversary of completion with a value of up to £1.25 million.

GHAM's appointment as external asset manager will add around £350 million to its third-party assets under management, while boosting its private equity capabilities. LMS directors Nicholas Friedlos and Anthony Sweet will subsequently step down from their roles and join GHAM.

For LMS, which has been winding up its legal structure, the deal will bring cost savings.