North-east entrepreneur Martin Gilbert has hailed a strong first half performance of “significant progress” by his new asset management vehicle.
AssetCo, in which Mr Gilbert – its chairman – owns a near-10% stake as part of a consortium’s 29.8% investment, today (June 28) posted results for the six months to March 31.
It also updated the market on a recent acquisition, Edinburgh-based Saracen Fund Managers, in a deal worth £2.75 million, being paid for through a share placement.
We believe AssetCo can play a key role by investing in, supporting and developing businesses to meet the needs of investors.”
Martin Gilbert
Subject to approval by the Financial Conduct Authority (FCA), the admission of new shares in AssetCo to trading on the Alternative Investment Market is expected by the end of September.
Saracen has three funds, operating on the T Bailey Fund Services platform. These are its Global Income and Growth Fund, with about £10m of assets under management (AuM), UK Alpha Fund – around £14m of AuM – and UK Income Fund, home to about £2m of AuM.
The board believes there exist significant opportunities to enhance the distribution and appeal of Saracen’s existing funds and to widen the funds offered.”
Mr Gilbert is the former chief executive and a co-founder of Aberdeen Asset Management (AAM).
He also had spells as co-chief executive and vice-chairman of Standard Life Aberdeen, which was created in 2017 through a £3.8 billion takeover of AAM by Standard Life.
Other investors in AssetCo include Peter McKellar – the former global head of private markets at Aberdeen Standard Investments – and ToscaFund Asset Management, where Mr Gilbert is chairman. Mr McKellar is now AssetCo’s chief executive and deputy chairman.
Mr Gilbert, Mr McKellar and their consortium partners have been investors since January 8.
In January and February this year the company acquired 5 million shares in asset manager River and Mercantile Group, where Mr Gilbert is deputy chairman, for £10.4m.
AssetCo had previously described itself as a provider of management and resources to the fire and emergency services in the Middle East.
Change of direction
On February 8, the firm announced its intention to change tack and focus on the development of an asset and wealth business.
The company had no revenue during the six months to March 31 but accrued £57.8m through a lawsuit and costs stemming from a Court of Appeal ruling, which saw accountancy firm Grant Thornton held liable for negligence after it failed to expose fraud at AssetCo.
Monmouthshire-based AssetCo now has £30.9m at its disposal to fund its asset and wealth management strategy following a £26.9m distribution to shareholders.
Share price jumps nearly 6%
The firm reported pre-tax profits of £22.3m, compared with losses of £700,000 a year ago.
Shares in the company were up nearly 6%, at £20.65, as of 1.30pm, but fell back to end the session unchanged at £19.50.
Spelling out AssetCo’s change of direction, Mr Gilbert said: “Our new business strategy, approved by shareholders in April, is to invest in, build and operate asset and wealth management businesses.
“The financial services sector is facing numerous challenges, but the importance of the industry in enabling clients and customers to achieve their financial goals is even greater.
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“We believe AssetCo can play a key role by investing in, supporting and developing businesses to meet the needs of investors.
“Our investment in River and Mercantile Group and our conditional acquisition of Saracen Fund Managers are part of this thinking.
“Over the coming months we hope to announce further activity as we roll out AssetCo’s strategy and build the business.”
Saracen offers ‘significant opportunities’
He added: “The board believes there exist significant opportunities to enhance the distribution and appeal of Saracen’s existing funds and to widen the funds offered.
“Saracen offers the Company the opportunity to acquire a FCA-regulated entity and the associated authorisations, subject to FCA change in controller approval.”
Mr Gilbert revealed he and the rest of AssetCo’s management team had been examining “a number of organic and inorganic proposals”.
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These are were various stages of discussion and negotiation, he said, adding: “The focus of this work is on areas of the asset and wealth management sector where the board believes that, due to the structural changes impacting the sector, attractive opportunities for investment exist.
“The board is hopeful of being able to announce further activity in the short term.”