City grandee Martin Gilbert tries to sell Assetco share split plan
Assetco chair Martin Gilbert is attempting to pitch his plan to split his company to investors in a bid to turn around the struggling asset manager.
In June, Gilbert proposed that Assetco will be rebranded as River Global, with its 30 per cent stake in investment management and platform business Parmenion spun off.
Now, Gilbert is meeting with prospective investors, as well as existing shareholders, selling the plan to split the struggling asset manager’s shares, Morning Wire understand.
The plan would see shareholders in Assetco given separate shares in Parmenion, which is not quoted on any stock market, and retain their holding in the asset management River Global business as an AIM-listed company.
Shareholders, who are set to vote on the plan, are expected to receive further details about it at some point this quarter.
“It is not expected that [Parmenion] shares will be traded on AIM but will be able to be traded on a matched bargain basis more suitable to the nature of the underlying interest,” the company explained in a stock exchange notice. “The company’s existing shares will, as a result, track the interest in the equities business.”
Assets under management and advice at Parmenion were £11.7bn at the end of March, up from £10.6bn in 2023.
“The splitting of shares is designed to try to solve the issue of the sum of the parts not reflecting what we think is the true value of the company. That will allow shareholders to hold whichever share they want in the business,” Gilbert told the Financial Times.
Gilbert is likely attempting to drum up support for the plan due to its mixed reaction among Assetco analysts, with many questioning whether the move was the right step for the company.
“We remain cautious on the proposal to spin out the Parmenion interest into a new private share class, as we are not convinced on the merits for either the company or shareholders,” said David McCann, an analyst at Deutsche Bank.
However, all seem to agree that the status quo for Assetco cannot continue.
“Even on conservative assumptions, the company’s 30 per cent stake in Parmenion can justify the current market capitalisation,” said Peel Hunt analyst Rae Maile.
An independent valuation of Parmenion commissioned by Assetco last year put the stake at an estimated value of £75m-£90m, far above the £53m the entire company is currently valued at by the market.
However, Maile argued that Assetco was currently failing to live up to its potential, arguing that “there is much value to be exploited” in River Global.
The struggling asset manager has seen its stock price sag 20 per cent since the start of 2024, and is down more than 80 per cent since its recent peak in May 2021.
In June, Gilbert said that profitability for Assetco was “eminently achievable” and exiting the loss making and complex early stage businesses had cleared the pathway towards it.
Assetco declined to comment.