Martin Gilbert’s Assetco endures ‘exceptionally difficult’ year but signs things are ‘picking up’

Martin Gilbert’s Assetco saw widening losses in the 2023 financial year as the firm struggled in an “exceptionally difficult” year for the asset management sector – but chair Martin Gilbert believes there are “tentative signs” of a recovery in market activity.

The firm cut £2.3m of costs during the financial year and has identified a further £2-3m in cost savings which are currently in action.

City grandee Gilbert noted the cost savings programme has required the firm to take “significant write-downs”, which have impacted results for the year.

This meant its loss for the year, including exceptional items and discontinued businesses, widened to £26.7m from £8.5m the year before. Excluding exceptional items it widened to £7.7m from £7.5m.

Its shares lost 10 per cent in early trade.

“Rising interest rates, inflation and the residual impact from the pandemic have all contributed to large net retail outflows from UK equities funds in particular, estimated at £13.6bn, accounting for 39 per cent of total net outflows across the industry over the period,” Gilbert said.

“AssetCo has not been immune from this pressure and River Global saw outflows from a number of its investment strategies, particularly UK equities,” he continued.

“The uncertain global economic and political backdrop continues to weigh on financial markets, although there are tentative signs that overall market activity may finally be picking up,” he said, adding a note of optimism.

“The Company’s main underlying businesses – River Global and Parmenion – have the financial strength, support and agility to weather current conditions Our management teams have a wealth of expertise and a range of products and capabilities which enables them to capitalise on opportunities as well as meeting the needs of our existing investors and we continue to see the future potential.”

Overall, active equity assets under management actually increased to £2.4bn from £2.3bn the year before.

Analysts at Numis said: “The FY23 results were overall largely as expected and reflect another year of restructuring and corporate change”.

They argued that looking forward, Assetco’s prospects will be determined by its ability to monetise Parmenion, an investment platform.

Assetco acquired a 30 per cent equity stake in Parmenion in October 2021. An independent valuation concluded that Assetco’s equity interest had a value of between £75 and £90m last August.