Row over Liontrust’s GAM takeover intensifies

A group of minority shareholders of GAM have doubled down on their opposition to the Swiss fund manager’s takeover by London-listed Liontrust.

The deal, which values GAM at around 107million francs (£94million), has previously been criticised for ‘undervaluing’ the group, among other concerns.

NewGame and Bruellan, which control 9.5 per cent of GAM shares, on Wednesday elaborated on their opposition to the deal and set out a four-part plan the investors claim could boost its value by ‘3x-5x over the next two to three years’.

They would also see GAM’s current management and board sacked and replaced with alternatives holding ‘skin in the game’.

London-listed Liontrust comes under pressure from rebel GAM investor group 

Urging fellow investors to block the takeover, the pair slammed a ‘lop-sided deal structure under which GAM shareholders will own only 12.5 per cent of the combined entity while contributing 40 per cent of [assets under management]’.

FTSE 250 Liontrust had AUM of £31.4billion as of 20 June, while GAM has 71.7billion CHF (£62.3billion).

NewGame and Bruellan said the terms of the deal ‘undervalue’ GAM, ‘despite the deal being immediately accretive to Liontrust’.

They also criticised Liontrust’s ‘track record as one of the worst-performing stocks in the fund management sector over the past 12-24 months’.

Liontrust shares are down by around 1 per cent over one year.

London-listed rivals Abrdn, Schroders and M&G, for example, have added 35.3, 0.7 and 0.8 per cent over the same period.

Finally, the investors said Liontrust has a ‘track record of value-destructive M&A’, highlighting the performance of eight City firms bought up by the group between 2011 and 2022, including Neptune and Architas.

They said: ‘Liontrust has made eight major deals in the last 12 years. According to Numis, 7 out of 8 of these acquisitions have been value destructive.

‘No wonder that Liontrust is one of the worst performing stocks in its peer group in the last 12 and 24 months and that it has significantly underperformed the FTSE 250 Index over the same period.’

This is Money has contacted Liontrust for comment on these points.

The investors also published a ‘thesis’ that ‘outlines multiple reasons why shareholders should not tender to the Liontrust offer and values GAM today at over twice the Liontrust offer’.

Their GAM turnaround plan includes raising 25million CHF (£22million) via the issuance of a convertible bond, and appointing a new leadership team and board ‘with significant skin in the game’ – or money invested in the business.

They would then ‘restructure’ GAM to ‘align cost structure with its current AUM’, and return the group to growth ‘by changing the funds mix, focusing on [ultra-high-net-worth] investors and rebuilding its alternatives and wealth management businesses’.

NewGame and Bruellan said: ‘The investor group has submitted its regulatory filing with the UK’s Financial Conduct Authority to be authorized to hold in excess of 10 per cent in GAM and is preparing to do the same in other relevant jurisdictions and it is awaiting [Swiss regulator] FINMA’s decision.’

Antoine Spillmann, CEO and partner at Bruellan and the investor group’s proposed candidate for chairman of GAM’s board, added: ‘We believe Liontrust’s offer significantly undervalues GAM and does not reflect the upside that a successful turnaround can generate for all stakeholders.

‘We have identified a top team to lead the turnaround and urge GAM shareholders not to tender to the dilutive and value-destructive Liontrust offer.’

Liontrust shares have been volatile over the last year 

This post first appeared on Dailymail.co.uk