GAM urges shareholders to accept Liontrust takeover as outflows rise

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GAM reported accelerating fund outflows and a SFr22.5mn loss in the first six months of this year, as it reiterated its plea for shareholders to accept the stumbling takeover proposal from Liontrust that it says is crucial to its survival.

The Swiss asset manager said its investment management business saw net outflows of SFr2.2bn ($2.5bn) — double the tally from the same period in 2022 — despite a “strong” investment performance with more than 70 per cent of its assets under management beating benchmarks this year.

GAM’s board has previously said its ability to continue as a going concern hinges on the takeover proposal from UK-listed Liontrust, which is facing a challenge from activist investors. On Thursday, chair David Jacob reiterated his support for the offer, one day before it expires.

“Our investment teams continue to excel, but the need for corporate stability is essential to give our clients confidence to allocate to our strategies,” he said in a statement. “The stable platform and investment that will be provided by the combined group, once the Liontrust offer is completed, gives our shareholders an opportunity to participate in future value creation.”

Assets under management stood at SFr21.9bn on June 30, and outflows were partly offset by positive market and exchange rate movements of SFr900mn.

Liontrust offered in May to buy the whole of GAM in a deal worth £96mn. It has extended its deadline twice and made clear it does not intend to raise the offer.

A group of activist investors, led by French telecoms billionaire Xavier Niel, has said Liontrust’s offer undervalues GAM’s potential. The group has launched its own offer for 17.5 per cent of GAM’s shares.

Part of the criticism is a £17.8mn loan provided to GAM by Liontrust. The group has said the deal is being made by the “creditor of last resort”, but GAM’s board said in response that the Liontrust deal is the only “viable option” to restructure the business and support it as a going concern.

GAM, once one of Europe’s biggest asset managers, has struggled to overcome its involvement in the Greensill scandal, which led to one of its start managers being fired, a £9.1mn fine from the Financial Conduct Authority, and a drop in share price, which has crashed 95 per cent in the past five years.

It was forced to delay its results statement twice this year as it was searching for a buyer, eventually announcing the deal with Liontrust.

FTSE 250 listed Liontrust has a history of acquisitions, snapping up seven smaller asset managers in 11 years, most recently the investment manager Majedie, which was acquired in December 2021.