Martin Gilbert’s AssetCo has struck a deal to acquire a 63% stake in Rize ETF for £16.5m, with a further £5.25m to be invested in the thematic ETF provider to fund growth.
AssetCo plans to raise approximately £25m of new equity from investors to fund the acquisition. Following the deal, management and employees will own an effective 37% equity interest in Rize ETF, of which 5% is subject to certain near-term performance conditions, the company said in a statement.
Martin Gilbert, chairman; Peter McKellar, deputy chairman and chief executive officer; and Mark Butcher, non-executive director; as well as Harwood Capital Management and Toscafund Asset Management, which are substantial shareholders of AssetCo, intend to participate in the placing.
AssetCo will conduct a non-preemptive placing of new ordinary shares of 10p each in the company at a price of 1,450p per share. The placing is being offered by way of an accelerated bookbuild, now available to investors, with Numis acting as financial adviser and bookrunner to the company. Arden Partners has been named nominated adviser and broker in connection to the bookbuild.
Rize was set up in February 2020 by former Legal & General Investment Management staff Rahul Bhushan, Stuart Forbes, Anthony Martin and Jason Kennard. It has over $450m of assets under management, with ETFs registered and available for sale in the UK and 12 countries throughout Europe and plans for further geographic expansion.
To date, Rize ETF has launched four thematic ETFs: Cybersecurity and Data Privacy; Educational Tech and Digital Learning; Medical Cannabis and Life Sciences; and Sustainable Future of Food. The ETF provider develops its thematic strategies in-house and has a pipeline of anticipated launches of new thematic ETFs.
Peter McKellar, deputy chairman and CEO of AssetCo, said: "The team at Rize has built an impressive thematic ETF platform, based on an incredibly exciting ethos. It provides investors access to products that enable them to participate in new and relatable themes and benefit from strong growth led by secular trends.
"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," he added.
"Our strategy is to position AssetCo to take advantage of the structural shifts taking place within the asset and wealth management industry, such as the increasing use of technology to help individual investors and their advisers. Rize has the team, pedigree and expertise to grow significantly and to continue to deliver product innovation for investors, building a world class thematic ETF business in the process."
Stuart Forbes, co-founder and director of Rize ETF, added: "We are pleased to announce the investment by AssetCo into our business. The funding we have secured enables us to turbocharge our growth and ambition to build the ETF provider of choice for the modern-day investor.
"We believe theme-based investing is in its early innings, and more and more investors are going to start investing in ways that better resonate with their long-term convictions while aligning with their personal values and belief systems. We are really looking forward to accelerating our ambitious plans on this exciting journey into the future of asset management, alongside all of our investors."
The deal, which will be paid in cash, is expected to close on 27 July 2021 and is not conditional on regulatory approvals.