Assetco Regulatory News (ASTO)

1 July 2021

This announcement contains inside information under Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended).

AssetCo plc

("AssetCo" or the "Company")

Conditional acquisition of equity interest in Parmenion

The Company is pleased to announce that it has reached agreement with Preservation Capital Partners Limited ("Preservation Capital Partners") to acquire effectively a 30% equity interest in Parmenion Capital Partners LLP (the "Acquisition"). The consideration will be up to £27.8 million (the "Consideration"), which will be paid in cash, with a payment of £20.6 million due on completion and up to £3.6 million due in each of March 2022 and March 2023.

The Acquisition is conditional on approval by the FCA to the change in controller, which is expected to occur by the end of September 2021. The Company will provide further updates, as appropriate.

About Parmenion

Parmenion is a FCA registered, B2B fund investment and advisory platform for the wealth and IFA sector, servicing around 1,100 adviser firms and 2,600 financial advisers The company was founded in 2007, employs 211 people and is headquartered in Bristol. Parmenion manages approximately £9 billion of assets under management ("AUM") and has delivered strong AUM growth, with average growth in annual net inflows of around 26% since 2015, compared to the overall adviser platform market growth of circa 14%. Parmenion's growth has been driven by its proprietary technology and strong customer service, which has seen it consistently rated by Platforum as number 1 or 2 each quarter since 2016 and its service model has been consistently ranked 5 star by Defaqto.

In January 2016, Parmenion was acquired by Aberdeen Asset Management plc. On 30 June 2021, funds managed by Preservation Capital Partners acquired 100% of the equity in Parmenion from Standard Life Aberdeen plc for a consideration of up to £102.0 million. For the financial year ended 31 December 2020, Parmenion's audited statutory accounts reported revenue of £29.8 million and an operating profit of £1.0 million before certain non-recurring items. As at 31 December 2020, it had net assets of £10.8 million and had £15.9 million of cash on the balance sheet. In the current financial year Parmenion continues to demonstrate robust growth.

Following completion of the Acquisition, it has been agreed with Preservation Capital Partners that Gordon Neilly, an adviser to AssetCo and former global head of strategy and corporate development at Standard Life Aberdeen plc will join the board of Parmenion.

Benefits to AssetCo

The Board of the Company believes that there exist significant opportunities to develop the business of Parmenion further, both organically and inorganically, including deepening its relationship with existing customers and growing its customer base, through on-going technology innovation and by broadening its discretionary fund management and platform offerings to meet customer demand.

The intention is that AssetCo will fund the initial consideration for Parmenion from internal cash resources and marketable securities currently held, totalling £31.6 million. In time, it is anticipated that the Company will raise additional equity capital further to the permissions granted by shareholders at the general meeting held in April 2021.

Peter McKellar, Deputy Chairman and CEO of AssetCo, commented: 

"Parmenion is a market leading investment and advisory platform. The business has a great opportunity to build on its strong IT and client focused foundations, given the digital transformation we are seeing within the asset and wealth management industry. The company has the people and expertise to grow and to continue to deliver for advisers and customers, as they seek to achieve their long-term investment objectives.

"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. It is intended that this will be achieved through the acquisition, primarily, of majority stakes in selected businesses which play into these structural shifts and supported by strong distribution to drive organic growth. Few businesses will divert us from this approach, but we were compelled by Parmenion's market positioning, strong growth potential and excellent management team and on this occasion we are delighted to have secured a significant minority interest in conjunction with Preservation Capital Partners. We are looking forward to working with Preservation Capital Partners and the Parmenion team in building the business and delivering value to investors and AssetCo's shareholders."

Enquiries:

AssetCo plc

Peter McKellar, Deputy Chairman and CEO

James Thorneley, Head of Communications

Tel: +44 (0) 7958 005 141

Arden Partners plc

Nominated adviser and broker

John Llewellyn-Lloyd / Akhil Shah

Tel: +44 (0) 20 7614 5900

Maitland/AMO

Neil Bennett

Rachel Cohen

Tel: +44 (207) 379 5151

In this announcement references to Parmenion are to Parmenion Capital Partners LLP, its ultimate parent company and all the subsidiary undertakings of that ultimate parent company or any one of them as the case may be.

This announcement includes "forward looking statements" including beliefs and expectations concerning (amongst other things) the financial performance and future opportunities for Parmenion. By their nature forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual performance and the realisation of opportunities may differ materially from those expressed or implied by the forward looking statements contained in this announcement. Save as required by applicable law and regulation the Company undertakes no obligation to release publicly the results of any up-date/revision to the forward looking statements contained in this announcement.