Gilbert’s AssetCo collects £30.9m to spend on M&A strategy

Gilbert’s AssetCo collects £30.9m to spend on M&A strategy

AssetCo, chaired by former Standard Life Aberdeen joint chief executive Martin Gilbert, is preparing to make further acquisitions having collected £30.9m to fund its asset and wealth management strategy.

In a trading update today (June 28), the firm reported pre-tax profits in its half year results were at £22.3m, up from a loss of £0.7m last year.

Despite this, for the six months to March 31 2021, it still reported revenue of nil which was unchanged from 2020. 

However, the firm received £57.8m in litigation awards and cost in the period, of which £26.9m was returned to shareholders and the remainder kept to fund its strategy.

The litigation award stemmed from a Court of Appeal ruling against accountancy firm Grant Thornton after it was held liable for negligence when it failed to expose a fraud at AssetCo. 

Gilbert, who was named chairman in March, said the the six months started with the “successful conclusion” of the Grant Thornton litigation and the receipt of the remaining litigation award and costs. 

“This resulted in AssetCo having accumulated cash balances of approximately £57.8m.

“This formed the basis for returning £26.9m to shareholders, by way of a tender offer, and for the balance of £30.9m to provide the initial resources for the company’s new asset and wealth management strategy.”

Last month AssetCo acquired Edinburgh-based Saracen Fund Managers for £2.75m.

At the time, it said the purchase would consist of 166,904 new ordinary shares and £664,774 in cash, to be paid on completion.  

Earlier this year, the company also acquired 5m shares in River and Mercantile at a total cost of £10.4m. 

Net assets as at March 31, 2021 were £31.1m, up from £28.4m last year, which AssetCo said was primarily due to the recent investment in River and Mercantile Group. 

In February, the board announced its intention to change the business strategy of the company to the development of an asset and wealth business.

The strategy for the business changed to “acquiring, managing and operating asset and wealth management activities and interests, together with other related services” and the firm said it had been examining a number of organic and inorganic proposals and was at various stages of discussion and negotiation. 

As part of the new strategy, it entered into an appointed representative agreement with Toscafund Asset Management to allow it to undertake certain specified regulated activities.

Gilbert said: “Our new business strategy, approved by shareholders in April, is to invest in, build and operate asset and wealth management businesses. The financial services sector is facing numerous challenges, but the importance of the industry in enabling clients and customers to achieve their financial goals is even greater. 

“We believe AssetCo can play a key role by investing in, supporting and developing businesses to meet the needs of investors. Our investment in River and Mercantile Group and our conditional acquisition of Saracen Fund Managers are part of this thinking. 

“Over the coming months we hope to announce further activity as we roll out AssetCo’s strategy and build the business.”