Europe's first specialist thematic ETF provider, Rize ETF has today (20 September) been acquired by ARK Invest, the parent of ARK Investment Management, the investment manager led by CEO Cathie Wood.
AssetCo sold its 70% equity stake in Rize ETF, effective immediately.
The deal sees AssetCo receive an up-front payment of £2.625m, a deferred payment of the same amount and an earn out provision, capped at £5.25m, which will operate over five years and is subject to a conditional minimum amount.
AssetCo acquired its stake in the ETF house for £16.5m just two years ago, along with a commitment to invest a further £5.25m in the business.
AssetCo chair Gilbert said the "best way" for Rize ETF to remain a key player in the European ETF market is to "partner with an established global player".
"We are therefore delighted to have reached agreement with ARK Invest LLP to establish Rize as their hub for expansion into Europe," he added. "ARK are a committed and highly successful ETF player based in the US and we are extremely pleased to have reached an agreement that maintains our interest in the growth of their business for a period and also to partner with them to launch our own ETF products (managed by River and Mercantile Asset Management)."
Rize ETF's founders will remain with the enlarged company "steadfast in their commitment to develop and deliver its products in the manner that has garnered acclaim across Europe", a statement by Rize said.
"By merging Rize ETF's expertise in thematic and sustainable index investing with ARK's innovative actively managed approach centred on disruptive innovation, the combined entity will offer its clients a more diverse array of investment options.
"ARK's acquisition marks a significant step for its global expansion strategy and will pave the way for the firm to introduce its suite of cutting-edge innovation ETFs, under the UCITS framework, to investors across Europe, the United Kingdom, and beyond, while also facilitating the sustained growth and expansion of Rize ETF's thematic and sustainable index ETFs in Europe and around the world."
Founded in 2019 by ETF industry veterans, Stuart Forbes, Rahul Bhushan, Jason Kennard and Anthony Martin, Rize ETF has become known across Europe for its innovative approach to building high quality, research-led and purpose-built thematic and sustainable index ETFs.
Prior to Rize ETF, the founders were integral to the building out of the European UCITS ETF business for ETF Securities, which was acquired by Legal & General in 2018. All of the founders will remain and continue to lead the growth and development of ARK Invest Europe.
Cathie Wood, Founder, CIO, and CEO of ARK Invest said: "Today's acquisition advances ARK Invest's commitment to offer high-quality thematic investment solutions to a global investor audience, particularly European investors who have not been able to access our products.
"We believe that the European ETF market presents a strong growth opportunity as new and younger investors continue to gain access to ETFs via the growth of digital platforms, and as active ETFs increase market share by meeting the demand for innovative investment exposures.
"We are delighted to welcome the talented Rize ETF team into the ARK family. By merging its passion for thematic and sustainable index investing with ARK's innovative actively managed approach centred on disruptive innovation, we can offer our clients a more diverse array of investment options to invest in the future. Together, we will continue to educate and empower investors, helping them to achieve their long term financial goals."
Stuart Forbes, Co-Founder of Rize ETF added: "The acquisition offers ARK an entry into the European ETF market, capitalising on our expertise and track record in building multiple European ETF businesses. Leveraging ARK's global network and our expertise in European distribution, we aim to strengthen our collective global presence. This initiative signifies not just business growth, but a collaborative exchange of global asset management best practices, insights and tactics."
Rahul Bhushan, Co-Founder of Rize ETF, stated: "Over the past five years, we've carved out a niche in thematic and sustainable ETFs. Uniting with ARK, a frontrunner in disruptive innovation investing and research, we are poised to offer an augmented product lineup spanning three pivotal growth areas in European ETFs: thematics, sustainability and actives. This collaboration not only facilitates a broader selection for our clients but also fosters a deeper engagement with research, steadfastly upholding our mutual dedication to sustainability."
In the coming period, the Rize ETF name and brand will gradually be retired to pave the way for "ARK Invest Europe".
Under the new ARK Invest Europe platform, existing Rize ETF index products will be distributed under the "ARK" prefix.
ARK Invest Europe will continue to uphold the high standards of investment research, portfolio management and client service for which ARK is known, all while tapping into Rize ETF's deep expertise covering the full lifecycle of ETFs beginning with product strategy and index development, legal and regulatory, tax, portfolio management and operations, capital markets, research, and marketing and distribution.
ARK purchased Rize ETF from AssetCo, a UK asset and wealth management business primarily involved in acquiring, managing, and operating asset and wealth management activities and interests, together with other related services.
As part of this agreement, ARK and AssetCo will partner to support the launch, on the newly established ARK Invest Europe platform, of several ETF products for the River and Mercantile business, AssetCo's active equity asset management subsidiary. ARK is minority-owned by Nikko Asset Management.
As of August 31, 2023, Rize ETF managed $452m across 11 UCITS ETFs classified as either SFDR Article 8 or 9, domiciled in Dublin and distributed throughout Europe. ARK manages approximately $25 billion in ETFs and other products globally.
