Assetco has said it is on track to return River and Mercantile (R&M) to profitability by early next year and has floated plans for a stock-split in order to appeal to a wider group of investors.
The Martin Gilbert (pictured)-backed asset and wealth management business reported revenue of £1.3m and a loss before tax of £2.6m for the six months ending 31 March.
The company said it was in line with expectations.
The results come at the end of a busy period for the company, which only started life in its current form a year ago, after Gilbert (pictured) led a consortium of investors to acquire a 29.8% stake in Assetco in January 2021.
It had previously specialised in leasing fire engines.
See also: Martin Gilbert eyes acquisitions after £31m windfall from Grant Thornton litigation
Getting River & Mercantile profitable again
A drawn-out bid to acquire R&M finally came to fruition in January 2022 when a £100m all-share deal was struck. Following completion, assets under management at Assetco stand at £12.2bn.
“Significant progress has already been made in terms of right-sizing the River and Mercantile business,” the company said.
In March, Portfolio Adviser reported that R&M had swung to a loss ahead of the acquisition. Over the six months to 31 December, it posted a statutory loss after tax of £6.8m, against a £3.3m profit the year before.
Assetco added: “It is hoped that, due to the actions being taken both on cost and building new revenue, River and Mercantile can be returned to profitability by early 2023.”
In February, Assetco scooped up Edinburgh-based Revera Asset Management for £2.8m.
Final FCA approval for the deal is expected shortly, the firm added. After which, R&M, Revera and Saracen Fund Managers will form Assetco’s listed equity platform.
In addition to the above, its stable also consists of Rize ETF and Parmenion.
See also: River and Mercantile acquisition sails through Assetco vote
Share price shake-up
Assetco issued six million new shares for the R&M acquisition, with more added to part-fund the Revera deal.
Per the financial results, it now plans to write to shareholders “shortly” with a proposal to instigate a sub-division of the company’s ordinary shares of 10p each.
How this will be done is “yet to be determined”.
“Such a sub-division would increase the number of ordinary shares and the board believes this would reduce the company’s share price to a level where smaller-sized dealings in ordinary shares would be more efficient.
“It would also improve the liquidity, spread and marketability of the ordinary shares to a wider group of investors,” the company added.
‘Uninhibited by legacy issues’
Assetco CEO Campbell Fleming said: “We have made good progress in developing Assetco’s listed equity platform, private markets capability and thematic ETF business.
“At the same time, Parmenion, which provides investment solutions to advisers and their clients, has expanded.
“The current market environment, alongside the structural shifts taking place within the asset and wealth management sector, supports a strategy of building an agile asset and wealth manager, uninhibited by legacy issues, to meet the needs of investors.
“There is still much to do, but we have the people, products and the financial strength to deliver for clients and shareholders alike.
“We will continue to invest in our existing businesses, assess strategic opportunities that will add value to our capabilities, and focus on generating organic growth.”
An interim dividend of 13p is expected to be declared in the fourth quarter of 2022.