The loss-making investment company chaired by Scottish asset management veteran Martin Gilbert has declared that profitability is “starting to look eminently achievable” as plans were revealed to effectively split the firm in two.

AssetCo cut operating losses by 65% to £1.6 million, after adjusting for exceptional items and before discontinued operations, in the six months ended March 31, flagging “sustained action” to cut costs.

It came as AssetCo announced proposals for a share split, with the introduction of a second share class designed to reflect its economic interest in Parmenion, which provides investment solutions to advisers and their clients. The firm said the existing shares would track the interest in the core equities business, with the company changing its name to River Global PLC.

Shareholders will be asked to vote on the proposals, with a circular expected in the third quarter.

AssetCo, which has built up a significant presence in Scotland through its acquisition of Saracen Fund Managers, Revera Asset Management, and SVM Asset Management in Scotland, revealed the plans as it highlighted further progress to simplify its structure in the first half.

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The company now comprises a wholly owned equities business, trading under the River Global name, and its structured equity interest in Parmenion. Assets under advice at Parmenion had increased to £11.7bn, compared with £10.6bn at the end of March 2023.

Mr Gilbert said: “The board believes that the factors driving value in these two lines of business differ significantly in terms of both quantum and timing and that, as a result, they have the potential to appeal to quite different types of investor. In order to better reflect this, and to fully realise the benefit that might result from allowing new and existing investors to access these different value profiles directly, the board is planning to publish proposals for a share split shortly.”

Mr Gilbert co-founded of Aberdeen Asset Management in 1983 and led the company through its £11bn merger with Standard Life in 2017, creating the firm now known as abrdn. Since leaving abrdn in 2019, he used AssetCo as a vehicle to acquire a series of asset and wealth management firms.

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Mr Gilbert said yesterday that the first half had been a “pivotal one” in the firm’s quest to achieve profitability. However, he conceded it was “sadly not immune” from market pressure, as investor sentiment remained weak and “fund flows across the industry remained consistently negative for the period, with industry outflows exceeding £16bn”.

AssetCo saw its assets under management drop by £200m over the period, although it said the “positive offset” to that was its acquisition of Ocean Dial Asset Management in October, which added around £166m of assets.

Mr Gilbert said: "The six months to end March 2024 has been a pivotal one in our journey towards profitability and cash generation. The work done in simplifying our business by consolidating equity asset management activities and exiting loss making and complex early stage businesses has helped clear a pathway towards profitability which, with continued hard work and effective execution of our cost saving plan, is starting to look eminently achievable.

“There remains a dependency on stable revenues but, in that context, it is particularly pleasing to note a couple of substantive and notable wins in UK equities with, finally, some tentative signs of improvement in market sentiment towards the asset class.

Mr Gilbert added: “Continuing revenues for the six months ended 31 March 2024 of £6.9m (31 March 2023 restated: £7.1m) have held up relatively well in a turbulent period and the business, while still loss-making, has demonstrated real progress towards profitability, making excellent progress in cost cutting since last year."

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AssetCo revealed it is now in “advanced discussions to partner with two organisations” over potential joint ventures “to leverage our expertise and infrastructure to mutual benefit”.

Mr Gilbert said: “These potential joint ventures are quite different (one working with an established overseas wealth manager and one bringing a leading global fund manager to market) but both would utilise our established infrastructure to facilitate additional growth. Assets under management are expected to be significant at an early stage and, while initial revenues to the group are reduced reflecting the role we play in each case, the additional scale and future opportunities are attractive as is the opportunity to work with high calibre individuals and businesses.”

AssetCo agreed a deal to sell the River and Mercantile Infrastructure business in October.

Shares closed up...