AssetCo sells 70% stake in Rize ETF to ARK Invest, eyeing European market growth

In a major shakeup in the exchange-traded fund (ETF) market, AssetCo has announced the sale of its 70% equity interest in Rize, a thematic ETF specialist, to ARK Invest, a leading U.S.-based ETF player. The deal includes an up-front payment of £2.625 million, a deferred payment of the same amount, and an earn-out provision capped at £5.25 million. The move aims to accelerate AssetCo’s growth and align it with ARK’s expansion into Europe.

AssetCo and ARK Invest Unite for Future Success and Partnership

The sale agreement is transformative for both AssetCo and Rize. It simplifies AssetCo’s business model, potentially reducing costs and increasing profits. For Rize, this deal serves as the linchpin for ARK Invest’s expansion into Europe. Both companies have agreed to collaborate on the launch of new ETF products for AssetCo’s active equity asset management subsidiary, River and Mercantile.

Performance and Financial Metrics That Matter

As of August 31, 2023, Rize managed $452 million in assets across 11 ETFs. These funds are all SFDR Article 8 or 9 compliant, domiciled in Dublin, and distributed throughout Europe. ARK Invest, on the other hand, manages a colossal $25 billion in ETFs and other products globally. For the fiscal year ending on September 30, 2022, Rize reported a loss before tax of £2.5 million on revenues of £1.9 million.

The Deal’s Immediate Impact and Terms

The deal’s completion takes immediate effect, transferring the economic responsibilities for the Rize business to ARK Invest. AssetCo had attributed a value of goodwill to Rize of £12 million as of March 31, 2023, but has decided to write that down to £5 million before accounting for sale proceeds.

Parmenion Capital Valuation Unveils AssetCo’s Growth Strategy

Separately, AssetCo released an independent valuation of its 30% equity interest in Parmenion, showing a current value between £75-90 million. The valuation affirms AssetCo’s strong position in the market, further solidifying its growth strategy.

Executive Insights: Leaders Comment on Future Opportunities

Martin Gilbert, Executive Chair of AssetCo, expressed enthusiasm about Rize’s potential in the European ETF market and said the best way to achieve this was through the partnership with ARK Invest. Cathie D. Wood, Founder, CIO, and CEO of ARK Invest, said the acquisition aligns with ARK’s commitment to providing high-quality thematic investment solutions globally.

This acquisition is a pivotal moment for AssetCo, Rize, and ARK Invest as they seek to expand and innovate in the rapidly growing ETF market. It promises to be a win-win situation, aligning AssetCo with ARK’s global reach and keeping it at the forefront of the European ETF landscape.