Assetco Regulatory News (ASTO)

20 September 2023

LEI: 213800LFMHKVNTZ7GV45

AssetCo plc

("AssetCo" or the "Company")

Sale of Interest in Rize ETF Limited ("Rize") and update on Parmenion

Sale of Interest in Rize ETF Limited

AssetCo is pleased to announce the disposal today of its 70% equity interest in Rize, a thematic ETF specialist, to ARK Invest LLC ("ARK"), a successful and established player in the ETF market based in the US. The sale agreement delivers consideration to AssetCo of an up-front payment of £2.625m, a deferred payment of £2.625m and an earn out provision, capped at £5.25m, which will operate over five years and is subject to a minimum, itself dependent upon certain conditions. In addition, the parties have agreed to work together to support the launch, on the Rize platform, of a number of ETF products for the River and Mercantile business, AssetCo's active equity asset management subsidiary.

The sale agreement accelerates the delivery of the potential of this fundamentally attractive business. Rize will become the hub for ARK's expansion into Europe and AssetCo is delighted to be aligned with ARK's and Rize's future success, both through the mechanism of the earn out agreement and the on-going ETF partnership. It also simplifies the AssetCo business model which will in turn reduce costs and improve profits.

As at 31 August 2023, Rize managed $452m in assets in 11 ETFs, all categorised as SFDR Article 8 or 9 compliant, domiciled in Dublin and distributed throughout Europe. ARK manages $25bn in ETFs and other products globally.

For the year ended 30 September 2022, Rize made a loss before tax of £2.5m on revenues of £1.9m, and as at 31 March 2023 gross assets were £0.75m. Completion of the deal is with immediate effect (Rize is not, itself, directly regulated), so that ARK takes immediate economic responsibility for the Rize business.

The value of goodwill attributed to Rize by AssetCo was £12m as at 31 March 2023 and AssetCo has decided to write that value down to £5m, before accounting for sale proceeds. Against this, the earn out from the sale agreement (capped at £5.25m) will emerge as a positive cash flow in future years.

Parmenion Capital Partners LLP ("Parmenion")

AssetCo is aware of the speculation around the value of its 30% equity interest in Parmenion that it acquired for an initial consideration of £20.6m in October 2021. Since acquiring the interest Parmenion has traded strongly in terms of AUM, revenue and profitability. Parmenion's shareholders have also received a number of approaches for the company.

As a result, AssetCo instructed an independent valuation of its equity interest in Parmenion that concluded that AssetCo's equity interest had a current value of between £75-90m. There are currently 141,009,943 AssetCo shares in the market which therefore equates to a value of between 53.2p and 63.8p per share for Parmenion alone.

Martin Gilbert, Executive Chair of AssetCo said:

"We have consistently said that we see enormous potential for the development of the ETF market in Europe and we continue to believe that Rize is well placed to be a key participant in that. We have come to the view that the best way for Rize to achieve that ambition is to partner with an established global player to do so. We are therefore delighted to have reached agreement with ARK Invest LLP to establish Rize as their hub for expansion into Europe. ARK are a committed and highly successful ETF player based in the US and we are extremely pleased to have reached an agreement that maintains our interest in the growth of their business for a period and also to partner with them to launch our own ETF products (managed by River and Mercantile Asset Management).

I am also pleased to share the results of an independent valuation of our interest in Parmenion which has been the result of some speculation in the market. The valuation confirms the considerable value of our stake and the strength of the Parmenion business."

Cathie D. Wood, Founder, CIO and CEO of ARK Invest added:

"Today's acquisition advances ARK Invest's commitment to offer high-quality thematic investment solutions to a global investor audience, particularly European investors who have not been able to access our products. We believe that the European ETF market presents a strong growth opportunity as new and younger investors continue to gain access to ETFs via the growth of digital platforms, and as active ETFs increase market share by meeting the demand for innovative investment exposures. We are delighted to welcome the talented Rize ETF team into the ARK family and to partner with AssetCo as part of this transaction. By merging the Rize Team's passion for thematic and sustainable index investing with ARK's innovative actively managed approach centered on disruptive innovation, we can offer our clients a more diverse array of investment options to invest in the future. Together, we will continue to educate and empower investors, helping them to achieve their long-term financial goals."

About ARK Invest LLC

ARK Invest LLC controls ARK Investment Management LLC which is a federally registered investment adviser and privately held investment firm. Specializing in thematic investing in disruptive innovation, the firm is rooted in over 40 years of experience in identifying and investing in innovations that should change the way the world works. Through its open research process, ARK identifies companies that it believes are leading and benefiting from cross-sector innovations such as robotics, energy storage, multiomic sequencing, artificial intelligence, and blockchain technology. ARK's investment strategies include Autonomous Technology and Robotics, Next Generation Internet, Genomic Revolution, Fintech Innovation, Space Exploration & Innovation, 3D Printing, Israel Innovative Technology, Venture Capital, and the overall ARK Disruptive Innovation Strategy. For more information about ARK, its offerings, and original research, please visit www.ark-invest.com.