REG - AssetCo PLC - Sale of Interest in Rize ETF & update on Parmenion

AssetcoAnnouncement

20/09/2023 07:00

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RNS Number : 0047N  AssetCo PLC  20 September 2023

20 September 2023

 

LEI: 213800LFMHKVNTZ7GV45

 

AssetCo plc

 

("AssetCo" or the "Company")

 

Sale of Interest in Rize ETF Limited ("Rize") and update on Parmenion

 

Sale of Interest in Rize ETF Limited

AssetCo is pleased to announce the disposal today of its 70% equity interest
in Rize, a thematic ETF specialist, to ARK Invest LLC ("ARK"), a successful
and established player in the ETF market based in the US. The sale agreement
delivers consideration to AssetCo of an up-front payment of £2.625m, a
deferred payment of £2.625m and an earn out provision, capped at £5.25m,
which will operate over five years and is subject to a minimum, itself
dependent upon certain conditions. In addition, the parties have agreed to
work together to support the launch, on the Rize platform, of a number of ETF
products for the River and Mercantile business, AssetCo's active equity asset
management subsidiary.

 

The sale agreement accelerates the delivery of the potential of this
fundamentally attractive business. Rize will become the hub for ARK's
expansion into Europe and AssetCo is delighted to be aligned with ARK's and
Rize's future success, both through the mechanism of the earn out agreement
and the on-going ETF partnership. It also simplifies the AssetCo business
model which will in turn reduce costs and improve profits.

 

As at 31 August 2023, Rize managed $452m in assets in 11 ETFs, all categorised
as SFDR Article 8 or 9 compliant, domiciled in Dublin and distributed
throughout Europe. ARK manages $25bn in ETFs and other products globally.

 

For the year ended 30 September 2022, Rize made a loss before tax of £2.5m on
revenues of £1.9m, and as at 31 March 2023 gross assets were £0.75m.
Completion of the deal is with immediate effect (Rize is not, itself, directly
regulated), so that ARK takes immediate economic responsibility for the Rize
business.

 

The value of goodwill attributed to Rize by AssetCo was £12m as at 31 March
2023 and AssetCo has decided to write that value down to £5m, before
accounting for sale proceeds. Against this, the earn out from the sale
agreement (capped at £5.25m) will emerge as a positive cash flow in future
years.

 

Parmenion Capital Partners LLP ("Parmenion")

AssetCo is aware of the speculation around the value of its 30% equity
interest in Parmenion that it acquired for an initial consideration of £20.6m
in October 2021. Since acquiring the interest Parmenion has traded strongly in
terms of AUM, revenue and profitability. Parmenion's shareholders have also
received a number of approaches for the company.

 

As a result, AssetCo instructed an independent valuation of its equity
interest in Parmenion that concluded that AssetCo's equity interest had a
current value of between £75-90m. There are currently 141,009,943 AssetCo
shares in the market which therefore equates to a value of between 53.2p and
63.8p per share for Parmenion alone.

 

Martin Gilbert, Executive Chair of AssetCo said:

 

"We have consistently said that we see enormous potential for the development
of the ETF market in Europe and we continue to believe that Rize is well
placed to be a key participant in that. We have come to the view that the best
way for Rize to achieve that ambition is to partner with an established global
player to do so. We are therefore delighted to have reached agreement with ARK
Invest LLP to establish Rize as their hub for expansion into Europe. ARK are a
committed and highly successful ETF player based in the US and we are
extremely pleased to have reached an agreement that maintains our interest in
the growth of their business for a period and also to partner with them to
launch our own ETF products (managed by River and Mercantile Asset
Management).

 

I am also pleased to share the results of an independent valuation of our
interest in Parmenion which has been the result of some speculation in the
market. The valuation confirms the considerable value of our stake and the
strength of the Parmenion business."

 

Cathie D. Wood, Founder, CIO and CEO of ARK Invest added:

 

"Today's acquisition advances ARK Invest's commitment to offer high-quality
thematic investment solutions to a global investor audience, particularly
European investors who have not been able to access our products. We believe
that the European ETF market presents a strong growth opportunity as new and
younger investors continue to gain access to ETFs via the growth of digital
platforms, and as active ETFs increase market share by meeting the demand for
innovative investment exposures. We are delighted to welcome the talented Rize
ETF team into the ARK family and to partner with AssetCo as part of this
transaction. By merging the Rize Team's passion for thematic and sustainable
index investing with ARK's innovative actively managed approach centered on
disruptive innovation, we can offer our clients a more diverse array of
investment options to invest in the future. Together, we will continue to
educate and empower investors, helping them to achieve their long-term
financial goals."

 

About ARK Invest LLC

ARK Invest LLC controls ARK Investment Management LLC which is a federally
registered investment adviser and privately held investment firm. Specializing
in thematic investing in disruptive innovation, the firm is rooted in over 40
years of experience in identifying and investing in innovations that should
change the way the world works. Through its open research process, ARK
identifies companies that it believes are leading and benefiting from
cross-sector innovations such as robotics, energy storage, multiomic
sequencing, artificial intelligence, and blockchain technology. ARK's
investment strategies include Autonomous Technology and Robotics, Next
Generation Internet, Genomic Revolution, Fintech Innovation, Space Exploration
& Innovation, 3D Printing, Israel Innovative Technology, Venture Capital,
and the overall ARK Disruptive Innovation Strategy. For more information about
ARK, its offerings, and original research, please visit www.ark-invest.com.

 

 For further information, please contact:

 AssetCo plc                               Numis Securities Limited

 Gary Marshall, CFOO                       Nominated adviser and joint broker

 Peter McKellar, Deputy Chairman           Giles Rolls / Charles Farquhar

 Tel: +44 (0) 7788 338157                  Tel: +44 (0) 20 7260 1000

 Panmure Gordon (UK) Limited               H/Advisors Maitland

 Joint broker                              Neil Bennett

 Atholl Tweedie                            Rachel Cohen

 Tel: +44 (0) 20 7886 2906                 Tel: +44 (0) 20 7379 55151

 For further details, visit the website, www.assetco.com
 (http://www.assetco.com/)

 Ticker: AIM: ASTO.L

 

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