GAM is scrambling to find a buyer ahead of results it has delayed by two months, five years after a scandal over private debt holdings that led to fines, the resignation of the investment firm’s chief executive and a collapse in its share price.
The Switzerland-listed fund manager recently postponed the release of its annual results to the end of April, hoping the extra time would allow it to strike a deal, according to several people familiar with the situation. GAM declined to comment.
GAM appointed UBS bankers at the end of last year to work on securing a sale of the firm after its share price dropped by 97 per cent from the start of 2018, pushing its market value below SFr100mn ($107mn) and sparking questions over its future as a standalone business. UBS declined to comment.
The urgent search for a buyer comes after a torrid period for what was once one of Europe’s biggest asset managers.
Its troubles arose in July 2018 when it suspended former star fund manager Tim Haywood with little explanation, leaving holders of his Absolute Return Bond funds rushing to the exits. 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 expressed concerns about the nature of Haywood’s relationship with Australian financier Greensill, which ultimately led to the liquidation of the funds. Chief executive Alexander Friedman stepped down. Haywood was subsequently fired and in 2021 GAM was hit with a £9.1mn fine by the UK’s Financial Conduct Authority for conflicts of interest.
GAM’s share price has plunged to SFr0.60 from nearly SFr18 before the Haywood scandal. Assets have dropped from more than SFr160bn at that time to SFr75bn today, making the manager vulnerable to a takeover approach. Losses at GAM are expected to widen to SFr42.8mn for 2022, from SFr9.6mn the previous year.
Still, its investment portfolios remain solid. GAM said in January that more than half of its largest strategies were ranked in the top decile among peers over three years, and two-thirds of its assets under management had outperformed their peer group, as measured by Morningstar.
Insurance company Generali was a potential suitor in 2019, people familiar with the matter say, although GAM said at the time that it was not in conversations with the Italian company.
GAM has since attempted to slash costs under chief executive Peter Sanderson, who came on board at the end of 2019, spending millions of Swiss francs on a partnership with software company SimCorp to try to consolidate its systems.
Some investors have shown signs of losing faith in the business. Bantleon, a German-based asset manager, has sold down its stake to less than 3 per cent from more than 10 per cent last year. Bantleon declined to comment.
However, New York-based investor Global Emerging Markets, one of GAM’s largest shareholders, last month increased its stake in the business to more than 5 per cent.
GAM said in January that the board was “constantly reviewing the progress of the firm to ensure that our strategy is appropriate” and that results would be delayed to allow time to provide an update on this strategy.