GAM held 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 races to find a buyer this month.

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

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

ZKB and Liontrust, a UK boutique fund manager, are among several potential suitors for GAM, which has endured a spectacular fall from grace since a scandal over its holdings of illiquid debt rocked the company in 2018. Its share price has plunged more than 95 per cent since the start of 2018, and last year the group hired UBS to help sell the business.

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

London-listed Liontrust disclosed earlier this week that it was in talks with GAM but cautioned that it 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 interests of all stakeholders”.

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

Once one of Europe’s biggest asset managers, GAM’s troubles began in July 2018 when it suspended former star fund manager Tim Haywood with little explanation, prompting investors in its Absolute Return Bond funds, which Haywood managed, to rush for the exit.

It later transpired that Haywood had bought bonds relating to Lex Greensill’s now collapsed supply chain finance business Greensill Capital, which counted former UK prime minister David Cameron as an adviser. Insiders at Zurich-based GAM had voiced concerns about Haywood’s relationship with Australian financier Greensill, which ultimately led to the liquidation of the funds.

Chief executive Alexander Friedman stepped down while Haywood was subsequently fired. In 2021 GAM was fined £9.1mn by the UK’s Financial Conduct Authority for conflicts of interest.

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