Arabesque almost doubles losses from funds and research businesses

Holding company owes Founder Director almost £13.7m

The holding company of Arabesque’s sustainability fund management and ESG research businesses almost doubled annual losses in 2019 against the previous year, to the tune of £6.18m at December 31, 2019 versus £3.35m in 2018.

The annual, audited accounts of Arabesque Asset Management Holding Company also show that the holding company owes Omar Selim, one of its Founder Directors, just short of £13.7m in capital.

The holding company is the parent to Arabesque Asset Management, the London based fund manager, as well as its investment management subsidiary offices in Germany, Singapore and the US.

It is also the majority shareholder in Arabesque AI, its London-based ESG quant research arm. In January this year, RI reported that DWS, the German fund manager, had acquired a 24.9% stake in Arabesque AI. In December 2019, Arabesque AI issued 2,490 nominal £1 shares valued at £7.6m.

The holding company is also the majority shareholder of ESG research firms, Frankfurt-based and German incorporated, Arabesque S-Ray GMBH, and its US incorporated subsidiary.

In July 2019, Arabesque secured $20m (€17.8m) in financing for a stake in Arabesque S-Ray, an independent subsidiary, although still ultimately owned by Arabesque. That capital injection came from the German State of Hessen, Allianz X, an investment arm of the insurer Allianz, Commerz Real, a subsidiary of banking group Commerzbank, and DWS, which revealed its stake to be 2.68%. 

The Directors of the holding company said significant investment had been made into its constituent businesses during 2019 and that it expected them to become profitable in 2021.

Arabesque Asset Management filed its year-end results at the same time as the holding company. They show it made a loss of £2.63m pounds in 2019, higher than losses of £1.64m in 2018.

Turnover at the fund manager was up at £1.83m versus £1.36m in 2018. However, administration expenses increased to £3.96m in 2019 from £2.92m in 2018.

A significant portion of this was a rise in staff costs to reach £1.89m in 2019 from £1.17m in 2018, although the company reported the same number of average monthly employees across the two years.

In September 2019, Arabesque launched a new Sustainable Global Equity Fund, which has performed relatively well in the six months against a global large-cap blend fund universe, returning 11.54% over six months versus 8.67% for the selected peer group.

Its Luxembourg-registered quant Arabesque ‘Systematic’ fund, which launched in early 2014 has underperformed the benchmark, the MSCI ACWI World index, returning 46.37% against 55.74% for the index since inception. 

London-based, The Arabesque Partnership LLP, is the ultimate controlling party of Arabesque Asset Management Holding Ltd.