Chinese Firm Invests In RevenueShares

May 22, 2013

It looks like RevenueShares will raise its game with the help of a Chinese investor.


RevenueShares, the ETF provider with a six-fund lineup of revenue-weighted strategies, has partnered up with a China-based venture capitalist firm in a deal that looks to not only help the ETF sponsor expand its footprint in the U.S., but also to plant the seeds of ETF development in China.

Suzhou Industrial Park Kaida Venture Capital—a Chinese private equity firm specializing in funding high-tech and financial companies across China—is paying $7 million for a 22 percent stake in VTL Associates, RevenueShares’ parent company, VTL’s Chairman Vince Lowry told IndexUniverse.

The deal really serves a twofold purpose: The money is designated primarily to boost RevenueShares’ marketing and sales efforts—something the company has done very little of in the past two years or so, Lowry said. RevenueShares launched its first ETFs five year ago.

But VTL’s willingness to give up a stake to a Chinese venture capital firm also reflects the firm’s commitment to bringing RevenueShares ETFs to China—an ETF market that is barely in its infancy, Lowry said.

Just last week, a Shanghai-listed ETF targeting the same Nasdaq-100 Index that underlies the $35 billion U.S.-listed PowerShares QQQ Trust (NasdaqGM: QQQ) launched in China, sponsored by Guotai Asset Management—a move that Lowry says speaks to the growing Chinese opportunity for ETF sponsors.

Growing Its Lineup And Presence

Coming off the fifth anniversary of its first ETFs launched in February 2008, RevenueShares found itself at an inflection point where it had to ramp up marketing and sales efforts given increased competition. But to do so, it needed outside investment.

“When we first launched our ETFs in February 2008, we caught just about the last tick up in the market, and the next three or so years were very tough markets to work in,” Lowry said. “But we still managed to get more than $600 million in assets, and now those assets are at about $530 million.”

The firm, which also has about $550 million in separate-account revenue-weighted strategies for large pension plans, manages about $200 million for other ETF companies—such as Yorkville, the firm behind the Yorkville High Income MLP ETF (NYSEArca: YMLP), and a few others, Lowry said.


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