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What's next for Martin Gilbert's AssetCo?

What's next for Martin Gilbert's AssetCo?
 Martin Gilbert, chairman of AssetCo

When Martin Gilbert stood down from his role as co-chief executive of Aberdeen Standard Investments in 2019, he could have greeted the prospects of retirement with a certain satisfaction.

 

As chief executive, he transformed Aberdeen Asset Management from a small, provincial company that made £87 profit in its first year into a business that, following its merger with Edinburgh rival Standard Life, became the largest asset manager in the UK. 

And his retirement would have been buffeted by non-executive director roles as diverse as mining giant Glencore, fintech firm Revolut and the European Golf Tour. 

But instead of going gently into the night in the manner typical of many other financial services professionals of his vintage, he instead became a shareholder in a listed business called AssetCo, where he has reunited with former colleagues and taken stakes in a number of asset management businesses and a platform.

Gilbert is chairman of AssetCo, with former Aberdeen Standard distribution director Campbell Fleming joining as chief executive at the start of October. 

AssetCo was actually a cash shell when Gilbert bought it. Originally the company was founded to supply fire services to the gulf states, but when it lost this contract, it became a shell that Gilbert and his associates bought. 

They have since raised capital and the annual report of the business shows the coffers were further boosted by the resolution of a legal case that predated Gilbert buying AssetCo. The case involved litigation against Grant Thornton, for audit failings. 

The case was settled for £57.8m, of which £30m was made available to run the company and fund future acquisitions. 

Further capital was raised via share issues, and the acquisition spree began.

Fleming says the long-term strategy for the business is inspired by former WPP chief executive Martin Sorrell, who upon leaving that business launched S4 Capital, which has made a number of acquisitions in the same sector, but is focused on challenger, rather than incumbent, companies, and on innovation rather than just consolidation.

Among the shareholders who joined Gilbert in the venture are Michael Spencer, who founded brokerage firm Icap, and also institutional investment firm Toscafund.  

Analysts at investment bank Numis rate AssetCo shares as a buy, but say the main risk for shareholders is that future fundraisings are likely to take place as a way to generate cash for the next lot of acquisitions and the issuance of new shares may have a negative impact on the share price. 

Saracen

The first financial services acquisition by AssetCo was Saracen Fund Managers, a fund house based in Edinburgh with assets of less than £120m spread across three funds. The company lost £6,000 in the financial year to March 2021, on turnover of just less than £1m, having lost £15,000 the previous year, according to data from Companies House.

The management of Saracen said prior to the takeover that they expected the business to return to profitability by 2024, and there was more than £300,000 in the bank at the end of the company’s accounting period.