Arrow Global shares tumble as profit slips at asset manager
Shares in Arrow Global slid this morning after the asset manager failed to hit the bullseye with its annual results, reporting a five per cent drop in profit.
The figures
Arrow Global reported a 5.2 per cent drop in underlying profit before tax, which slipped to £78.1m in 2019 from £82.4m the previous year.
The drop came despite a 7.5 per cent in the asset manager’s core cash collections, which hit £442.3m.
Gross asset management and servicing (AMS) income rose 5.9 per cent to £140.1m, making up 36.4 per cent of the group’s total income.
Third party AMS also rose 2.9 per cent to £94.4m in 2019.
Basic earnings per share hit 20p for 2019, a 17.6 per cent jump, while Arrow announced a 3.1 per cent increase in its full-year dividend to 13.1p.
Arrow shares fell as much as 11.17 per cent in morning trading.
Why it’s interesting
Arrow Global is in the process of pivoting itself from a business focused on debt investment to a third party fund manager, and launched its fund management business last year.
The division has an initial €838m (£738m) funds under management, and is targeting a total of €2bn under management by the end of 2020.
Arrow said it had not seen any coronavirus-related disruption to its business to date, including its operations in Italy, where collections remained ahead of target in February.
Shore Capital analysts said that if the outbreak’s “economic impact does start to bite then we would expect this to manifest itself in a delay to cash flow rather than a permanent impairment.
“Furthermore, as a distressed investment business any economic slowdown is likely to create additional investment opportunities,” they added.
What Arrow Global said
Chief executive Lee Rochford said Arrow had “performed well against its key operating metrics in 2019”.
“We are excited by Arrow’s future prospects and continue to see enormous opportunity to generate strong returns in our chosen markets,” he added.
“The launch of our fund management business is transformational for the group, allowing us to capture more of this opportunity while also growing our capital light earnings. Our initial fundraise of €838m was a milestone in our evolution to become a fully integrated alternative asset manager. We believe we can scale this business significantly over time”.