Asset and wealth management investor, AssetCo, has acquired a 63 per cent equity interest in the UK’s thematic ETF issuer Rize ETF for GBP16.5 million, which will be paid in cash.
AssetCo is also committing a further investment to Rize ETF of GBP5.25 million to help fund the growth of the business. The equity interest will be acquired from J&E Davy Holdings. The acquisition is expected to close on 27 July 2021 and is not conditional on regulatory approvals.
Rize ETF has USD450 million in assets, in four bespoke thematic ETFs, having launched its first ETF in February 2020.
The firm writes that, unlike many ETF providers, who licence off-the-shelf indices, Rize ETF develops its thematic strategies in-house, working with thematic sector experts in each case. Rize ETF was recently named winner of “Best New ETF Entrant” (ETF Express Awards, 2021) and “Best ESG Fund: Thematic” (ESG Investing Awards, 2021).
Following the Acquisition, management and employees will own an effective 37 per cent. equity interest in Rize ETF, of which 5 per cent. is subject to certain near-term performance conditions.
For the financial period from 1 February 2020 to 30 December 2020, Rize ETF reported revenue of GBP197,569 and an operating loss of GBP1.93 million. As at 30 December 2020, Rize ETF had net assets of GBP326,927.
In the current financial year Rize ETF is showing growth, with current annualised run-rate revenues to June 2021 of more than GBP1.5 million. Following completion of the Acquisition, it has been agreed with Rize ETF that Gordon Neilly, an adviser to AssetCo, and Gary Collins, Head of Distribution at AssetCo, will join the board of Rize ETF.
AssetCo’s board believes that there is enormous growth potential in the area of thematic ETF investing. Through a combination of AssetCo’s support with incremental capital and asset management expertise, coupled with access to new partnerships and distribution opportunities, the Board is confident Rize ETF will continue to grow rapidly and maintain a leading position in providing thematic ETFs to investors.
The intention is that AssetCo will fund the consideration for Rize ETF from an equity financing by way of an accelerated bookbuild for approximately GBP25 million, which will be launched in due course.
Peter McKellar, Deputy Chairman and CEO of AssetCo, says: “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. 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. We are looking forward to working with the Rize ETF team in building the business and delivering value to investors and AssetCo’s shareholders.”