Swiss fund group GAM has struck a deal to be acquired by London-listed Liontrust for £96mn after weeks of trying to find a buyer to secure its future.
Liontrust said on Thursday it would buy the whole of GAM to form a global asset manager overseeing £53bn. Liontrust plans on keeping GAM’s investment business rather than its fund servicing arm, which it is aiming to offload to a specialist servicing company.
To fund the deal, Liontrust will initiate an equity raise by issuing 9.4mn of shares. GAM shareholders will own about 12.6 per cent of the combined group once the deal is completed, expected in the fourth quarter this year. Liontrust will also provide two loans of up to £17.8mn to help restructure GAM.
The acquisition comes after long negotiations between GAM and several interested parties to pin down a transaction, twice forcing the Swiss asset manager to delay its annual earnings results. It will bring some reprieve for investors following a calamitous five years after a scandal over GAM’s risky debt holdings led to customer outflows and a tumbling share price.
Shares in GAM were down 24 per cent in early morning trading as analysts flagged concerns over the deal. Liontrust’s shares were down 4 per cent.
David McCann, analyst at Numis, said he had “strong reservations”. He pointed to the £11mn of deal costs, noting that they were higher than he previously expected, and said restructuring costs were likely to exceed the company’s estimate of £45mn.
But GAM chief executive Peter Sanderson said the resulting business “will have a strong balance sheet, a broader array of excellent investment products and a global distribution footprint from which to deliver growth that our shareholders can participate in the future”.
John Ions, chief executive of Liontrust, said: “[We are] committed to the international business and client relationships that GAM has built. We are especially pleased to have such a strong operation in Switzerland which has been so important to GAM’s heritage.”
Under Ions, Liontrust has made a series of acquisitions over the past decade, most recently Majedie Asset Management, the UK investment business of Architas, and Neptune Investment Management.
Liontrust, which has a range of funds focused on equities, will broaden its offering under the deal to include fixed income and alternatives. The acquisition will also boost its fund sales team globally, especially in Europe.
GAM has been through a turbulent period since a scandal in 2018 over its holdings of illiquid debt. Problems arose when it suspended former star fund manager Tim Haywood with little explanation, leading investors in the Absolute Return Bond funds, which Haywood managed, to rush for the exit.
It later transpired that Haywood had bought bonds from companies related to Lex Greensill’s now collapsed supply chain finance business Greensill Capital, which counted former UK prime minister David Cameron as an adviser. Haywood’s funds were ultimately liquidated.
Last week, a group of investors including French telecoms billionaire Xavier Niel bought a 7.5 per cent stake in GAM.
GAM finally released its annual earnings on Thursday, reporting a loss before tax of SFr42.5mn ($48mn) for 2022, compared with a loss of SFr9.6mn the previous year. Assets under management across the business fell from SFr100bn to SFr75bn by the end of the year.
