Assetco has confirmed the acquisition of a majority stake in exchange traded funds provider Rize ETF and its intention to raise £25m to support the deal through issuing new shares.
The deal, first reported by Sky News, sees Assetco gain a 63% share in Rize ETF and is worth £16.5m to be paid in cash. The equity interest will be acquired from J&E Davy Holdings.
Assetco said it will commit a further £5.25m of investment to Rize ETF to help fund the growth of the business.
To help fund the deal, shares will be issued to new and existing investors expecting to raise gross proceeds of approximately £25m. The total number of shares will represent approximately 26% of the company’s existing issued share capital.
Assetco directors including chairman Martin Gilbert (pictured), deputy chairman and chief executive Peter McKellar, and non-executive director Mark Butcher will take part in the share placing, as will substantial shareholders Harwood Capital Management and Toscafund Asset Management.
McKellar said: “The Rize approach to product development echoes one of the fundamental principles on which Assetco’s strategy is based: that a new approach to asset management, unbridled by legacy constraints and ways of doing things, will drive significant growth, as technology led manufacturing and distribution of investment products tap into the new, emerging trends in the way the next generation of investors choose to allocate their capital.”
The addition of an ETF provider marks a widening in strategy focus for Assetco which until now has involved acquiring stakes in active managers Saracen Fund Managers and River and Mercatile, as well as platform Parmenion.
Fairview Investing consultant Ben Yearsley said the move shows that Assetco is looking to have all parts of the investment chain within one group.
“Looks like it will be a far more diverse business than maybe many suspected when it first set up,” he added.
Following completion of the acquisition, Gordon Neilly, an adviser to Assetco, and Gary Collins, head of distribution at Assetco, will join the board of Rize ETF.
