GAM starts funding talks with investors after Liontrust bid fails

Receive free GAM Holding AG updates

We’ll send you a myFT Daily Digest email rounding up the latest GAM Holding AG news every morning.

Shareholders in struggling Swiss asset manager GAM have rejected a takeover offer from UK rival Liontrust, forcing it to enter discussions with an activist investor group as it tries to stay afloat.

Some 33.5 per cent of GAM shareholders voted for the takeover, which the company had previously said was essential “to continue as a going concern”.

The collapse of the deal calls into question the future of GAM: its share price has crashed 95 per cent since 2018 after its involvement in the Greensill scandal led to a fine by regulators and the removal of one of its star managers.

GAM said it was now in talks with the activist group — which is led by French telecoms billionaire Xavier Niel and includes wealth management company Bruellan — focusing on short-term bridge financing that the group had previously offered.

Part of the Liontrust offer was a £17.8mn loan to GAM, half of which has already been drawn down. The loan was contingent on the takeover going through, and will now be terminated at the end of the year.

Earlier this week, GAM criticised the activist group’s offer of short-term bridge financing to replace the Liontrust loan, saying it would be “insufficient” to maintain GAM as a going concern.

“The level of capital injection required in the immediate foreseeable future exceeds SFr100mn,” GAM said. It lost SFr23.5mn in the first six months of the year.

The activist group — which says it owns 9.6 per cent of GAM shares — said the Liontrust proposal significantly undervalued the company and the potential value that a turnaround could generate for shareholders. They had previously offered to buy 17.5 per cent of the company at SFr0.55 a share.

Liontrust’s offer was 0.06 of its own shares for each share in GAM, which closed yesterday at SFr0.45.

GAM’s board had previously said the Liontrust offer was the “only viable option” for the group.

Liontrust’s share price has fallen 42 per cent since the start of the year.

The GAM news might result in a “minor relief rally” for Liontrust, said Numis analyst David McCann.

David Jacob, chair of GAM, said the board acknowledged that the majority of shareholders had not found the Liontrust offer compelling and that discussions with the activist group continue.

John Ions, chief executive of Liontrust said: “We are disappointed we did not win the support of the majority of GAM’s shareholders and are grateful to those . . . shareholders who did back our offer.”