Liontrust, the specialist fund management group, has conditionally agreed to acquire GAM, the troubled investment management group, in an all share approach, with ordinary shares of a penny each in the capital of Liontrust issued to GAM shareholders for a valuation of GAM’s share capital at CHF107 million (US$120.6 million).
Just five years ago GAM’s valuation had been approximately £2 billion, but in 2018 scandal struck. A range of absolute return bond funds, holding illiquid assets, had to be liquidated. The funds were run by investment manager, Tim Haywood, who was suspended due to concerns about conflicts of interest and due diligence, relating to steel magnate Sanjeev Gupta and Australian financier Lex Greensill. The firm was fined £9.1 million in 2021 by the UK’s Financial Conduct Authority for the affair, and Haywood, who had already been sacked for gross misconduct by the firm in 2019, was also fined.
GAM is listed in Switzerland and has, within its investment management division, assets under management (AUM) of CHF 23.3 billion, operating in 12 countries with clients in almost every continent. Of its 3,500 clients globally, around 2,700 are based in Europe. The merged company would be a global asset manager with £53 billion (US$66.6 billion) in AuM, based on Liontrust’s AuM of £31.7 million as at 17 April 2023 and GAM’s Investment Management division AuM of CHF 23.3 million as at 31 March 2023, with the proposed acquisition expected to complete in the 4th quarter of 2023.
The deal should broaden Liontrust’s fund range and asset classes, including in fixed income, thematic equities and alternatives, which the firm says would provide a platform for growth by providing “enhanced client solutions globally” and reducing the correlation of returns across the fund range through increased diversification. It would bring in experienced investment teams, including nine fund managers rated A to AAA by Citywire.
Liontrust reports that GAM has reached agreement in principle to transfer all third-party fund management services clients serviced out of Luxembourg and Switzerland to a specialist asset servicing company active across Europe, with further details to be announced by GAM in due course.
John Ions, chief executive of Liontrust, said, “This is a significant acquisition that accelerates the growth of Liontrust through enhancing our distribution globally, product capability and investment talent … We have been impressed by the quality of the investment teams at GAM. There is commonality in that Liontrust and GAM are both committed to independent and distinct processes for each of their investment teams … Liontrust is 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.
The quality of the investment teams across the different asset classes, the talent in the business and the breadth of the distribution at GAM, combined with Liontrust’s existing investment capability and strong brand, sales, marketing, and communications, gives me great confidence we will grow the enlarged business to create long-term value.”
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