Thursday, July 18, 2024

GAM Fund Managers publicly endorses LionTrust acquisition


Senior fund managers at GAM have publicly backed the Swiss conglomerate’s proposed sale to UK rival LionTrust, an unusual intervention designed to drum up support for a deal under criticism from shareholders including French billionaire Xavier Niel Is.

In an open letter to GAM’s board on Tuesday, fund managers from the Swiss company said there was “a cultural alignment between GAM and Liontrust” and that London-listed Liontrust had a vision for “how to grow the grown company”. It was an effective strategy.

The portfolio managers linked the proposed sale to “a highly respected peer with a legacy in fund management, a strong record of acquisitions and integrations and consistently strong profitability in the best interests of GAM clients”.

Once a high-flying asset manager, GAM has spent months looking for a buyer after struggling to fully recover from a 2018 scandal over its holdings of risky private debt. After twice delaying the release of its results to buy more time to strike a deal, a £96 million sale to LionTrust was finally agreed this month.

However, the sale has faced opposition on several fronts, including from Swiss entrepreneur Marco Garzetti, who last week revealed plans to invest SFr65mn in GAM in an effort to preserve the Swiss conglomerate’s independence.

Niel has also led a consortium of investors taking a stake in GAM, arguing that the shares are “undervalued” and offer “significant upside”.

Mergers between asset managers sometimes stumble upon the challenge of integrating businesses whose main assets are often their people, making the intervention of GAM’s fund managers crucial.

Last week, Garzetti said that he and his partners at Tor Invest were ready to make a “long-term commitment” to GAM, “fundamentally transform the company and make a fresh start”.

However, GAM rejected Torre’s offer saying it “materially undervalued the firm”. The board said Toure’s offer would value each GAM share at approximately SFr0.26, while LionTrust’s was valued at more than 2.6 times.

The authors of the letter to GAM’s board included Atlanticonium and Fermat Capital, a third-party group that helped manage funds for GAM.

The group led by Neil said some of the terms attached to the LionTrust proposal were “unfair”. LionTrust is looking to acquire GAM’s investment business but is selling its fund services arm.