ETF Securities invites offers in excess of £1bn

Dec 5th, 2011 | By | Category: Commodities

ETF Securities, a leading and highly-innovative global player in exchange traded products, has put itself up for sale, according to a report in the Financial Times.

ETF Securities invites offers in excess of £1bn

ETF Securities, a specialist in exchange traded commodities, has invited offers in excess of £1bn.

The UK-based asset management firm has over $28bn of client funds under management, of which almost two-thirds is held in physical precious metals – mostly gold – via exchange-traded products.

The company’s founder, Graham Tuckwell, 55, a former investment banker from Australia, stands to make more than £500m from the sale if the company achieves the £1bn price tag many analysts are estimating.

Tuckwell, who previously worked for Salomon Brothers and Credit Suisse investment banks, created the first gold ETF on the Australian Securities Exchange in April 2003 and launched the first ETF that tracked the price of oil two years later.

The company has experienced phenomenal growth over the past few years and has benefited from both a surge in investment flows into gold and silver, as investors sought the relative protection of safe haven assets, as well as increased demand for less-correlated alternative asset classes, such as commodities.

This increase in commodities demand has coincided with an explosion of interest in exchange traded products in general. Estimates indicate that ETFs now have around £1.5trn under management, with gold ETFs apparently now holding some 2,430 tonnes of the metal – more than most central banks.

But while exchange traded products have grown rapidly and gained acceptance among mainstream investors, many regulators have raised concerns about systemic risk and the potential for them to cause a new global financial crisis.

Despite these concerns, however, it is expected that ETF Securities will receive significant interest from investment banks, asset management firms and private equity groups. According to reports, Goldman Sachs, the firm hired to sound out potential bidders, has asked for unconditional offers to be submitted before Christmas.

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