ARC Funds (ASX:ARC) has completed a debt-for-equity swap with Merewether Capital Management, raising its ownership stake to 72%.
The move strengthens ARC Funds' position and ties with Merewether Capital, known for its high conviction investment strategy focusing on small and microcap ASX-listed companies.
Merewether Capital, founded in 2021, manages the Merewether Capital Inception Fund, and focuses on profitable, growing companies.
The recent agreement involves the conversion of existing debt worth $150,000, which significantly increases ARC's equity share from 45.5% to 72%, with the remaining stake held by Luke Winchester.
Scott Beeton, Managing Director of ARC Funds, stated, "We have a strong commitment to the Merewether Capital Inception Fund and are focused on its long-term success."
"We are committed to growing this business unit and in future may seek to launch new fund offerings under the Merewether brand," Beeton added.
As part of the arrangement, Scott Beeton joins the board of Merewether Capital, complementing directors Luke Winchester and Harley Grosser.
The decision aligns with ARC Funds' strategic aim to expand its Australian Financial Services licensing, fund trustee, and fund administration services.
The increased stake and new board appointment are expected to enhance efficiencies within Merewether Capital, including lower operational costs by transitioning Fund Administration services to ARC Funds.