Martin Gilbert’s asset manager AssetCo announced more details on its previously announced proposals for a share reorganisation and its plan to change its name to River Global.
The firm also published a trading update showing assets under management increased from the £2.372 billion reported at the end of June to £2.779 billion at the end of September 2024.
This included the £100 million new business win reported into the company’s UK Opportunities Fund in June 2024. It also included the successful launch of one of the two joint ventures AssetCo referenced in June 2024 — an initiative to bring a leading fund manager to market.
AssetCo said the share reorganisation “will better represent the key elements of the company’s two principal existing business interests, River Global and Parmenion.”
The company will issue a circular to shareholders proposing the reorganisation of its share capital by sub-dividing and reclassifying the company’s existing ordinary shares into new A ordinary shares and new B shares.
Martin Gilbert, executive chairman of AssetCo, said: “The Share Reorganisation will benefit the Company and Shareholders as the new share structure better reflects the value proposition of the Company’s two separate and distinct business interests, River Global and Parmenion.
“It is anticipated that this will enable a more consistent valuation of the Company in the mid-term as well as making the Company’s shares more attractive.
“The Directors unanimously recommend that you vote in favour of the Resolutions being proposed at the General Meeting.”
In its trading statement, AssetCo said: “Unaudited results for the year ended 30 September 2024 show an operating loss of £2.9m (after adjusting for discontinued operations and exceptional items) and an overall loss of £4.0m. This result (which remains subject to adjustment as part of the year end audit process) keeps us on track with the trajectory we had previously outlined towards run rate profitability.
“Nearly €400m was added to the group’s assets under management in a fund raising to mark commencement of the joint venture referenced above. Founder clients invested in two former River Global badged funds now managed by Jonathan Knowles, previously one of the top equity fund managers for Capital International Group – one of the largest asset managers in the world.
“The revenue share for River Global in respect of the initial founder assets is relatively small but arrangements for future third party funds are expected to be more remunerative. Given that Jonathan Knowles and supporting employees of his firm, Compound Equity Group, operate under the existing River Global regulatory and operational framework to manage what were previously small, unprofitable funds, the arrangement capitalises on existing infrastructure and is revenue enhancing from outset.
“Overall, flows for the River Global group to the end of September 2024 remained positive from the last reporting period to the end of March 2024, and markets also contributed positively.
“The Group was notified in October that it had been appointed to manage a substantial mandate for a UK institution with funding for that mandate due to take place in March 2025. This win was not included in our budget planning and would therefore have made a positive contribution in the year ahead.
“Unfortunately, however, the Group was terminated as manager in December by a US institution for whom the Group has managed two portfolios for some six years. The assets under management (c.£200m) and revenues (c.£1m) relating to the UK and US institutions essentially offset each other leaving the Group no worse but no better off on an on-going basis as a result.
“Elsewhere, headwinds continue to batter the active equity asset management industry with some £16bn in outflows from UK Equity fund products alone in the year to end November. The Group is not immune to this and has seen some £193m of additional outflows in the first quarter of the new financial year which requires further management action in order to keep us on the track towards profitability that we signalled above.
“The Company’s project to consolidate back-office service providers has been delayed somewhat from the target the Company had set to deliver around its financial year end but is otherwise progressing well and is now expected to deliver in the first quarter of the 2025 calendar year. The synergies associated with that project remain on track albeit with a later starting point.
“Parmenion acquired EBI Portfolios Ltd in September 2022 and together the two companies had assets under management or advice of £11.7bn as at 31 March 2024 which compares favourably to £10.6bn at the same time in the previous year. Operating profit for the combined businesses was £15.5m at their December 2023 year end which again compares favourably to the previous year’s result of £11.9m. Revenue generated by the combined businesses over the year to end December 2023 amounted to £48.6m. Overall, EBITDA more than tripled in the three years to end December 2023.
“Parmenion continues to garner awards from across the spectrum of investment platform providers, including ‘Best model portfolio service 2024′ (for its EBI business) at the Professional Adviser Awards 2024 and first place in 6 out of 11 categories in the Defaqto platform service review 2024. It is Defaqto 5 Star rated and Defaqto Gold Service rated amongst 20 Defaqto ratings covering all aspects of its business.
“Parmenion serviced 1570 financial advisory firms as at end December 2023 and continues to add functionality to its proprietary technology, importantly adding a new Platform Switch Service in 2023 which facilitates the process of transitioning to Parmenion for financial advisory firms …”