GAM Holding AG, the parent company to global asset manager GAM Investments and home to perhaps the largest catastrophe bond fund strategy in the world, has now received a counter-offer to its impending acquisition deal with Liontrust, as an investor group has offered to buy its shares at a 29.1% premium to that arrangement.
Recall, back in May we reported that GAM Holding AG had received and approved an acquisition offer from specialist fund management group Liontrust.
That deal, if it proceeds, will see all of the GAM investment funds rebranded, which will presumably include its large GAM Star Cat Bond Fund and other ILS strategies it manages.
Liontrust has a stated objective to diversify its range of fund strategies, with alternatives one target area, so the GAM Investment Management division with its around CHF 23.3 billion (£20.9 billion) of assets as of 31 March 2023, would be a good fit for the asset manager.
GAM Investments is where the GAM Star Cat Bond Fund, the largest UCITS catastrophe bond fund in the marketplace and perhaps the largest of any single cat bond fund strategy, sits, with the portfolio managed by recognised insurance-linked securities (ILS) firm Fermat Capital Management, one of the leading market names.
As we reported recently, the Fermat Capital Management portfolio managed GAM Star CAT Bond Fund was the largest of the UCITS cat bond funds at June 30th 2023, having reached $2.85 billion.
But not all of GAM’s investors agree that the Liontrust deal is in their best interests and so investor group NewGAMe and Bruellan has made a partial cash offer for 28 million GAM shares at CHF 0.55, which they call a 29.1% premium to the value of the Liontrust offer.
This investor group already holds some 9.6% of the issued share capital of GAM Holding AG.
The offer would see this group acquiring a further 17.5% of the issued capital of GAM and the price offered is a premium of 31.9% to the closing price of the GAM shares on July 17 2023.
The investor group notes that Liontrust’s offer includes its own shares, so believe their cash offer is an improvement.
They said, “Liontrust’s offer not only grossly undervalues GAM but is also subject to execution contingencies, which make it highly unattractive. The Group believes that GAM can be successfully restructured and return to profitability. It is therefore encouraging shareholders not to tender their GAM shares to Liontrust’s offer and to support GAM’s restructuring. Acknowledging the execution risks of the contemplated restructuring, the Group is nonetheless offering those GAM shareholders who wish to exit the company an opportunity to realize some of their investment at attractive conditions.”
Albert Saporta, director of NewGAMe SA, added, “The announced offer gives a partial exit to shareholders who are concerned by the absence of an alternative to Liontrust’s inadequate offer. As GAM’s second-largest shareholder, we are convinced there is a significant upside associated with the successful restructuring of the company and are confident that GAM shareholders are better off remaining invested in the company.”
It’s not clear whether this new offer puts Liontrust’s at risk, at this stage.
Were it to proceed though, this new offer could see GAM’s branding retained, while also retaining an investor base behind the business that appears committed to restructuring it and returning it to growth.
GAM has not responded to the new offer yet.
Update: GAM’s Board said that it continues to recommend the Liontrust offer as it is a full acquisition rather than an acquisition of some shares.
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