AssetCo is paying a total of £2.75 million in cash and shares for the capital firm, which was founded in the late 1990s.
The deal follows a wave of consolidation in the sector, including the recent acquisitions of Caledonia Asset Management, Adam & Co and Cornerstone Asset Management.
AssetCo said its deal was subject to approval by the Financial Conduct Authority and the admission of new shares to London’s Alternative Investment Market (Aim), which is expected to occur by the end of September.
Saracen has three funds, operating on the T Bailey Fund Services platform, called Global Income and Growth Fund (with some £103m of assets under management), UK Alpha Fund (about £14m of assets), and UK Income Fund (approximately £2m of assets).
The firm operates from an office in Rutland Square and has five full-time employees, all of whom will enter new employment contracts on completion of the deal.
Following completion of the Acquisition, Saracen will continue to operate from Edinburgh under the Saracen brand. Martin Gilbert and Peter McKellar, Directors of AssetCo, will join the board of Saracen on completion.
Following completion of the acquisition, Saracen will continue to operate from Edinburgh under the Saracen brand. Gilbert and Peter McKellar, directors of AssetCo, will join the board of Saracen on completion.
McKellar, deputy chairman and chief executive of AssetCo, said: “Saracen is a small fund management firm with great potential. Its business model, people and product offering are its key assets and are an ideal fit for AssetCo.”
Graham Campbell, chief executive of Saracen, said: “We’ve known Martin and Peter for some time and are excited about working with them to help grow Saracen’s three existing funds and to develop the overall business.
“Importantly the investment philosophy and team will remain the same. We believe our focus on active management and fundamental research with a long-term mindset is well placed to help investors achieve their financial goals.
“Our clients are supportive of this approach and we are now focused on introducing our funds to a wider range of prospective investors.”
Saracen generated turnover of £985,364 and a loss after taxation of £15,146 for the financial year ended March 31, 2020, and had net assets of £400,661, as of the end of that period.
McKellar added: “I’m looking forward to working with Graham and the team. Our focus will be on building on Saracen’s strong foundations, particularly the experience and expertise of its management team and their investment approach.
“We aim to grow the business through marketing its existing funds and over time broadening its product range to continue to meet the needs of customers.
“The proposed acquisition is part of AssetCo’s overall strategy of acquiring and investing in asset and wealth management businesses.
“The industry is contending with multiple structural shifts. These are presenting challenges and opportunities for incumbent firms and we believe we can capitalise on this to help unlock value and to deliver for clients and investors.”