AssetCo 2021 results: Pre-tax profits and share price quadruple

The figures come following the purchase of equity stakes in four businesses over the course of 2021 – Rise ETF, Parmenion, Saracen Fund Managers and River and Mercantile – amid AssetCo’s new goal to build and operate and wealth and asset management firm.

Its capital has subsequently almost doubled over the last 12 months, increasing to £56.1m from £32.3m, including a tender offer that returned £27m to shareholders. AssetCo’s share price also quadrupled over the period, having increased from £4.11 to £17 per share.

Since its launch in 2019, AssetCo’s assets under management have increased from zero to £9.6bn.

Acquisitions

Throughout January and February last year, AssetCo purchased five million shares in asset management firm River and Mercantile for £10.4m. In May, it acquired the entirety of Edinburgh-based boutique Saracen Fund Managers for £3.4m, which has £113.2m of assets under management, with the aim of building out its product range.

In July 2021, AssetCo bought a 68% majority stake in Rize ETF for £16.5m and a 30% equity stake in fund investment and advisory platform Parmenion; the former of which offered the firm access to the “enormous growth potential in the area of thematic ETF investing”, according to Fleming, while the latter gave access to a platform that has “consistently” been ranked ‘number one’ for its size by financial advisers.

The purchase of R&M came following AssetCo’s belief that it has been “significantly undervalued” given the value of two of its standalone businesses was “not properly recognised”. Saracen offered the firm growth potential, according to Fleming, with AssetCo having already hired a new fund manager for the business arm.

“In addition, we are looking to build our listed equities capabilities through further acquisitions,” he added.

Grant Thornton settlement

2020 culminated in the end of an embittered court battle between AssetCo and Grant Thornton, which was appointed to audit the firm’s accounts between 2009 and 2010.

Formerly a holding company for subsidiaries offering fire and rescue support services, AssetCo’s former senior management team was accused of mistaking profits and misappropriating money, with assets having been overstated by £120m.

After a group of investors ended up having to offer short-term financial support, AssetCo brought a professional negligence claim against Grant Thornton – which said it was “duped” into giving AssetCo unqualified audit reports.

The ongoing court case – the result of events happening long before chair Martin Gilbert took to the firm’s helm – came to a head in October 2020 when Grant Thornton decided not to appeal to the Supreme Court. This crystallised the award of £30.5m granted by the Court of Appeal in January 2019, which allowed AssetCo to return £26.9m to its shareholders by way of a fully-subscribed tender offer.

The firm also said its significant year-on-year pre-tax profit increase to £16.1m was also largely due to the conclusion of the case.

“Immensely proud”

CEO Fleming, who was appointed to his role in October last year, said: “I am immensely proud of the progress AssetCo has made over the past year. Thanks to the hard work of our chair and deputy chair, Martin Gilbert and Peter McKellar, and the rest of the team, AssetCo has been transformed into an agile asset and wealth management business, not burdened by legacy issues, constraints or complexities.

“The potential acquisition of River and Mercantile, subject to shareholder and regulatory approval, will augment our strategy and will become a core part of our equity platform and the cornerstone of our private markets offering as well as increasing our AUM to over £12bn.

“I am confident that AssetCo has established the foundations to continue to grow organically and through selective acquisitions and most importantly to deliver for investors.”