WisdomTree Investments, a US-based exchange-traded fund (ETF) sponsor and asset manager with $34 billion in assets under management, has announced that it will expand into Europe through a majority investment in UK-based ETP provider Boost.
ETF industry veterans Hector McNeil (left) and Nik Bienkowski are to become Co-CEOs of WisdomTree Europe.
WisdomTree will invest $20 million in working capital to fund the build-out of a local European platform and operations to be led by ETF industry veterans Hector McNeil and Nik Bienkowski.
Through this platform, WisdomTree intends to launch a select range of UCITS ETFs under the WisdomTree brand and continue to manage and grow the Boost lineup of short and leveraged ETPs under the Boost brand.
WisdomTree launched its first US-listed ETFs in June of 2006 and is the only publicly traded asset manager exclusively focused on the ETF industry. Its range of 61 ETFs across equities, fixed income, currency income and alternatives asset classes has approximately $34 billion in assets under management.
The New York-headquartered firm is a market leader in fundamentally weighted ETFs, currency hedged equity ETFs and actively managed ETFs. In seven years, it has become the fifth largest ETF provider in the US and the eighth largest globally.
“We continue to successfully execute our growth plans in the US, the world’s largest ETF market, and today’s announcement marks the latest in a series of measured steps we have taken to participate in global ETF market growth,” said WisdomTree CEO and President Jonathan Steinberg. “We have an important marketing relationship with the Compass Group to serve Latin America and we have made some of our ETFs available for sale in Mexico and Japan. As the second largest ETP market after the US, Europe is a strategically important market and is the next natural step given our stage of development. Europe will represent our most significant international effort to date, and we are pleased to enter this market with an accomplished team.”
WisdomTree’s Vice Chairman, Bruce Lavine, formerly the Head of iShares’ European ETF business, added, “We believe Europe is poised for continued and significant ETF growth fueled by constructive regulatory changes and growing customer appreciation of the benefits of the structure. For WisdomTree specifically, the demand for smart beta has never been stronger. The decision for us to expand in Europe is a natural one, and we look forward to working with Hector and Nik to provide clients with thoughtful local solutions.”
Prior to founding Boost, Europe’s only specialized provider of short and leveraged ETPs, in late 2011, Hector McNeil and Nik Bienkowski held senior leadership positions at ETF Securities – one of the world’s leading, independent ETP providers and a pioneer in commodity investments – which they helped grow from the company’s start-up to 70 employees globally and $22 billion in AUM by 2010.
Hector McNeil and Nik Bienkowski added, “WisdomTree is an ETF success story and precisely the kind of innovative and entrepreneurial company we are excited to join. We look forward to continuing to grow the Boost ETP family under WisdomTree and we are pleased to lead the platform for WisdomTree’s European ETF plans.”
Agreement summary
– Platform formation: WisdomTree to acquire Boost; form WisdomTree Europe to house WisdomTree and Boost product families.
– Ownership: WisdomTree to hold 75% ownership stake of new WisdomTree Europe entity; existing Boost shareholders to hold 25% combined ownership.
– Leadership: McNeil and Bienkowski to be named Co-CEOs of WisdomTree Europe.
– Working capital infusion: WisdomTree to provide $20 million cash investment to fund European expansion over four years.
– Deferred payout: WisdomTree to acquire remaining 25% ownership from existing Boost shareholders at the end of four years. Payout formula based on European AUM at the end of four years and tied to WisdomTree’s enterprise value over global AUM at the time of payout, and affected by profitability of European business; payment over two years.
– Transaction close: Subject to regulatory approval and other customary closing conditions, the transaction is expected to close in the first half of 2014.