AssetCo agreed to acquire Saracen Fund Managers in a £2.75 million ($3.9 million) deal that will bring the money manager acquisition firm a Financial Conduct Authority license.
The two firms announced Friday that AssetCo, which focuses primarily on acquiring, managing and operating money and wealth management activities and is led by former Aberdeen Asset Management founder and CEO Martin Gilbert, that the deal will be financed through new share issuance and cash. The acquisition is subject to FCA approvals, which are expected by the end of September.
Edinburgh-based Saracen has about £120 million in AUM in three strategies: the £103 million Global Income and Growth Fund, £14 million U.K. Alpha Fund and £2 million U.K. Income Fund. The firm has five full-time staff members, with all entering new employment contracts upon completion of the deal. A spokesman for AssetCo confirmed that there will be no change in Saracen's senior management and strategies.
AssetCo's Mr. Gilbert, chairman, and Peter McKellar, deputy chairman and CEO, will join Saracen's board upon completion of the deal. Saracen will continue to operate under its own brand, with AssetCo working to enhance the distribution and development of existing strategies, as well as working on new capabilities.
"Finally, Saracen offers (AssetCo) the opportunity to acquire a FCA regulated entity and the associated authorization, subject to FCA change in controller approval," said a regulatory filing by AssetCo.
"Saracen is a small fund management firm with great potential," Mr. McKellar said in the filing. "Its business model, people and product offering are its key assets and are an ideal fit for AssetCo."
The proposed acquisition is part of AssetCo's overall strategy to acquire and invest in money and wealth management businesses, Mr. McKellar said. "The industry is contending with multiple structural shifts, including demographics, fee compression and a greater focus on ESG. These are presenting challenges and opportunities for incumbent firms and we believe we can capitalize on this to help unlock value and to deliver for clients and investors."
Saracen CEO Graham Campbell added in the filing that the team has known Messrs. Gilbert and McKellar "for some time."
A notice published on Saracen's website said: "It has become increasingly difficult for smaller boutiques to gain traction with larger managers. With the backing of AssetCo, Saracen will be able to increase research capacity, distribution capabilities and fund offerings. This deal promotes continuity of all staff and no change to our philosophy and process for our funds."
AssetCo, which secured a contract in March 2010 to provide fully outsourced firefighting services in the United Arab Emirates — which it lost in October 2018 — said in a February regulatory filing that its board intended to change its business strategy to the development of a money and wealth management business.
In March, having accumulated cash, receivables and bonds from its Abu Dhabi business and concluded litigation against its former auditors, the board reviewed its structure and future strategy, announcing it would use the AssetCo platform for a money and wealth management business.
Cementing its plans in place, Mr. Gilbert, a founder of Aberdeen Asset Management and most recently co-CEO of Standard Life Aberdeen, was appointed chairman and Mr. McKellar, former global head of private markets at Standard Life Aberdeen, was named deputy chairman and CEO — reuniting the two at the helm of AssetCo. Mr. Gilbert in January, along with a group of investors, acquired a 29.8% stake in AssetCo.
AssetCo also holds a 5.85% stake in money management firm River & Mercantile.