Martin Gilbert-backed AssetCo has agreed to buy a majority stake in European firm Rize ETF.
It will acquire 63% equity interest in the European provider of exchange traded funds for a cash consideration of £16.5m ($22.7m, €19.2m) from Irish group J&E Davy Holdings.
AssetCo is also committing a further investment of £5.25m to help fund Rize ETF’s growth.
The deal is expected to close on 27 July 2021 as it is not conditional on regulatory approvals.
Following completion, management and employees will own a 37% equity interest in the firm, of which 5% is subject to certain near-term performance conditions, AssetCo said in a London Stock Exchange announcement.
As part of the deal Gordon Neilly, an adviser to AssetCo, and Gary Collins, head of distribution at the firm, will join Rize ETF’s board.
The acquisition will be paid for via an equity financing of approximately £25m, which will be rolled out “in due course”.
Peter McKellar, deputy chairman and chief executive of AssetCo, said: “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.”
Stuart Forbes, co-founder of Rize ETF, said: “We are pleased to announce the investment by AssetCo into our business. The funding we have secured enables us to turbocharge our growth and ambition to build the ETF provider of choice for the modern-day investor.
“We believe theme-based investing is in its early innings, and more and more investors are going to start investing in ways that better resonate with their long-term convictions while aligning with their personal values and belief systems.
“We are really looking forward to accelerating our ambitious plans on this exciting journey into the future of asset management, alongside all of our investors.”