GAMMay 23 2023

Gam fund managers voice support for Liontrust deal

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Gam fund managers voice support for Liontrust deal
REUTERS/Arnd Wiegmann

Gam’s senior fund managers have publicly shared their support for Liontrust’s takeover of the business, after the deal came under fire from a number of parties.

In a statement released today (May 23), senior portfolio managers at Gam said there was “cultural alignment” between the two companies and the deal is in the best interests of Gam’s clients.

“Liontrust has a clear vision for the future, with a focus on investment and wealth management only, and an impressive strategy for how to grow the enlarged company,” the letter said.

“It is our view that an industry sale to a highly regarded peer with a heritage in fund management, a strong track record of acquisitions and integrations and consistently strong profitability is in the best interests of Gam clients.”

The takeover, announced on May 4, came after years of share price decline for the Swiss asset manager after one of its fund managers was caught up in the Greensill scandal, where a supply chain business advised by former prime minister David Cameron collapsed.

A day earlier, the board rejected a takeover bid from Taure AG, run by Marco Garzetti, who wrote an open letter to Gam’s shareholders last week outlining his plan to put Gam “back on the road to success”, by investing Sfr65mn (£58mn) in the company’s shares and through a loan. 

Garzetti said his plan was to focus the company on active asset management, and to “fully realise” the company’s growth potential. 

“As a Swiss entrepreneur and investor, it is important to me that Gam remains an independent company and sharpens its focus on its core business, active asset management,” he wrote.

However, the company’s board hit back, saying the deal was rejected as it “materially undervalued” the firm, represented a significant solution to existing shareholders and did not eliminate the risks of Gam remaining an independent firm. 

Gam’s board re-iterated its support for the Liontrust deal, which will create a wealth manager of £53bn in assets under management.

The deal has also been criticised by French telecomms billionaire Xavier Niel, who has led a group of investors to file an objection against the Liontrust deal, focusing on the condition that allows the bidder to withdraw its offer if Gam cannot sell its fund management business, which the investor group said was “unfair” to shareholders. 

Gam had previously delayed its 2022 results to give it more time to agree a deal, and Liontrust confirmed last month it was in discussions to acquire the company.

The group posted a post-tax loss of Sfr290mn (£261mn) in 2022, and assets under management dropped from Sfr99bn at the end of 2021 to Sfr75bn a year later.

Liontrust has also suffered with a declining share price, which has crashed 28 per cent in the past 12 months, including a 3.6 per cent drop this morning.

Analysts at Numis said they had “strong reservations” about the deal, which they said is complicated and complex, given the ongoing losses, multi-geographical nature, and the need to close the administration business.

The restructuring costs are “looking low”, Numis said, and the deal “risks management being distracted from the existing business for some time”.