Sunday, June 23, 2024

GAM holds takeover talks with Zürcher Kantonalbank


Switzerland’s Zürcher Kantonalbank has held takeover talks with GAM, the troubled asset manager that delayed its results as it raced to find a buyer this month.

ZKB, the largest of Switzerland’s state-owned cantonal banks, has held discussions with GAM about acquiring the business in recent months, according to people familiar with the situation.

GAM, which includes an investment management arm and a fund services division, pushed back the release of its annual results in February to find additional time to secure the sale. The asset manager is scheduled to release its results on Tuesday.

ZKB and LionTrust are among several potential contenders for GAM, a UK boutique fund manager, which has suffered a spectacular fall from grace since a scandal involving illegal loans rocked the company in 2018. Its share price has fallen by more than 95 percent. Percent since early 2018, and last year the group hired UBS to help sell the business.

ZKB said it is “continually examining opportunities within its business development strategy” but declined to comment on “rumours”.

London-listed LionTrust revealed earlier this week that it was in talks with GAM, but cautioned that this may not lead to a formal offer.

Another investment firm, New York-based Z Capital Group, has also shown interest in buying GAM, according to a person familiar with the matter, as it seeks to expand its asset management business. Z Capital Group declined to comment.

GAM said earlier this month that “the board is working tirelessly on options to ensure that the firm is strategically positioned in the best interest of all stakeholders”.

A banker said GAM was a “quite complex business” made up of a fund administration division that services third parties as well as its own investment management arm.

GAM’s troubles, once one of Europe’s largest asset managers, began in July 2018 when it suspended former star fund manager Tim Heywood with little explanation for helping investors with its Absolute Return bond funds, which Haywood managed, rushing to the exit.

It was later revealed that Haywood had bought bonds belonging to Lex Greensilk’s now-defunct supply chain finance business Greensilk Capital, which counted former UK Prime Minister David Cameron as an advisor. Insiders at Zurich-based GAM had raised concerns about Haywood’s ties to Australian financier Greensilk, which ultimately led to the liquidation of the fund.

Chief executive Alexander Freedman quit while Haywood was subsequently fired. In 2021 GAM was fined £9.1mn by the UK’s Financial Conduct Authority for conflict of interest.

While GAM never recovered from the scandal, the company said its funds have performed well, reporting in January that more than half of its largest products were ranked in the top decile over the past three years.