(Sharecast News) - AssetCo and its fully-owned subsidiary River & Mercantile Holdings announced an agreement on Friday to transfer its corporate partnership interest in River and Mercantile Infrastructure Income Fund's investment adviser, RMI, to a partnership within RMI helmed by managing partner Ian Berry.
The AIM-traded company said the deal was tentatively set to finalise in the fourth quarter, pending the completion of the final contractual documentation.
It said the strategic shift came after a thorough analysis by AssetCo, R&M Holdings, and RMI partners, determining that the prospects of both the fund and the broader business would be best served with RMI operating externally from the AssetCo Group.
Partners within RMI agreed to continue the management and operation of RMI independent of AssetCo's oversight.
In financial terms, RMI was expected to generate £0.53m in management fee revenues for the year ended 30 September, despite an anticipated loss of £0.75m before accounting for non-recurring items.
In June, a provision of £1.7m was made against assets relating to RMI in AssetCo's interim results.
Those assets weighed in at a gross balance sheet value of £2.5m, or £0.5m net.
Notably, while consideration for the transaction would be a nominal £1, the discharge from certain preceding obligations would usher in a write-back of £0.7m for AssetCo.
"We are pleased to have reached agreement with Ian and his team for them to take the business of RMI out of the AssetCo Group," said executive chair Martin Gilbert.
"This will allow that team to re-shape the RMI business to focus on delivering the best outcome for the fund's clients while leaving AssetCo to focus on building its active equities business.
"In doing so, we are looking to capitalise on the recent acquisition of Ocean Dial Asset Management and bring this together with our other active equities businesses under the River & Mercantile banner."
Gilbert said in that context, the operations of the company's three legacy Scottish businesses were now fully amalgamated into a single unit, pending further integration with River & Mercantile in London before the end of the calendar year.
"This move, following quite swiftly on the heels of our disposal of Rize ETF, delivers a much-simplified group which is better able to withstand the significant headwinds that persist in global markets for asset management services.
"Our narrower focus, together with the financial support of our valuable stake in the business of Parmenion, gives us renewed confidence for the future."
At 1230 BST, shares in AssetCo were up 1.07% at 37.9p.
Reporting by Josh White for Sharecast.com.
Assetco (ASTO)