GAM fund managers publicly back Liontrust takeover

GAM’s senior fund managers have publicly backed the proposed sale of the Swiss group to UK rival Liontrust, an unusual intervention designed to shore up support for a deal that has come under fire from shareholders including French billionaire Xavier Niel.

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

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

Once a high-flying asset manager, GAM spent months searching for a buyer after struggling to fully recover from a 2018 scandal over its holdings of riskier private debt. After twice delaying the release of its results to buy more time to strike a deal, it finally agreed a £96mn sale to Liontrust 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 attempt to preserve the Swiss group’s independence.

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

Mergers between asset managers have sometimes stumbled over the challenge of integrating businesses whose chief asset is frequently their people, making the intervention by GAM’s fund managers a significant one.

Last week, Garzetti said that he and his colleagues at Taure Invest were prepared to make “a long-term commitment” to GAM, “fundamentally turn the company around and make a fresh start”.

However, GAM rejected Taure’s proposal, stating that it “materially undervalued the firm”. The board said Taure’s offer would value each GAM share at approximately SFr0.26, whereas Liontrust’s was more than 2.6 times higher.

The authors of the letter to GAM’s board include third-party groups, Atlanticomnium and Fermat Capital, that help manage money for GAM.

The Niel-led group said that some of the conditions attached to the Liontrust offer were “unfair”. Liontrust is seeking to acquire GAM’s investment business but sell off its fund services arm.