LONDON, UK: AssetCo, a UK-based asset management company, has announced the sale of its 70% stake in Rize, a thematic ETF specialist, to ARK Invest, a US-based ETF provider. The deal will give AssetCo an up-front payment of £2.625m, a deferred payment of £2.625m and an earn out provision of up to £5.25m over five years.
AssetCo and ARK Invest will also collaborate to launch new ETF products for AssetCo’s subsidiary, River and Mercantile.
The sale will allow Rize to become the hub for ARK Invest’s expansion into Europe and align AssetCo with their future success. It will also simplify AssetCo’s business model and improve its profitability.
Rize manages $452m in assets in 11 ETFs that are compliant with the EU’s Sustainable Finance Disclosure Regulation (SFDR). ARK Invest manages $25bn in ETFs and other products globally.
Rize made a loss of £2.5m on revenues of £1.9m in the year ended 30 September 2022, and had gross assets of £0.75m as at 31 March 2023. The deal was completed with immediate effect, as Rize is not directly regulated.
AssetCo wrote down the value of goodwill attributed to Rize from £12m to £5m, before accounting for sale proceeds. The earn out from the sale agreement will generate positive cash flow for AssetCo in the future.
AssetCo also disclosed the valuation of its 30% stake in Parmenion, a digital wealth management platform that it acquired for £20.6m in October 2021. An independent valuation estimated that AssetCo’s stake was worth between £75-90m, which translates to 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 investors around the world. We are excited to partner with Rize, a leading innovator in the European ETF market, and leverage their platform to expand our presence and reach in Europe. We look forward to working with AssetCo and River and Mercantile to create new ETF products that will benefit from our combined expertise and vision.”