Liontrust Asset Management has agreed to buy Swiss asset manager GAM for £96m ($121m) creating a business with £53bn in assets under management and administration (AUMA).
In a stock exchange announcement on 4 May, Liontrust said it would acquire the entire issued share capital of GAM, taking on board SFr23.3bn ($26.2bn) in AUMA, global distribution offices in 12 countries and some 3,500 clients.
The deal will grow Liontrust’s AUMA, which currently sits at £32bn, by over 65%, and considering the significant boost to distribution channels, and greater access to clients in the European market, managing director of Chelsea Financial Services Darius McDermott called the acquisition “extraordinarily cheap.”
“GAM’s share price has fallen a long way, over 96% in the last five years, and with Liontrust in acquisition mode in recent times the deal does not come as a surprise,” he said.
McDermott added: “Liontrust’s market capitalisation sits at £562m, according to the London Stock Exchange, and it has £32bn AUMA. Through this deal, Liontrust will add £21bn in AUMA, as well as a greater European presence and a more diversified product range, all for under £100m.
“By paying just over a sixth of its own market cap, Liontrust is growing AUMA by nearly two-thirds. It looks extraordinarily cheap.”
McDermott added that Liontrust CEO John Ions has a good track record of successful acquisitions and the £96m deal means Liontrust will buy GAM’s shares at a 16% discount to their closing price 3 May.
The completion of the acquisition still relies on the GAM offloading its Fund Management Services business, which has around CHF 48.4bn of third-party fund assets under management, as well as two-thirds of GAM shareholders voting in favour.
If all hurdles are overcome, the deal is expected to complete in the fourth quarter of this year.
Ions said: “This is a significant acquisition that accelerates the growth of Liontrust through enhancing our distribution globally, product capability and investment talent.
“Liontrust and GAM are both client centric businesses that thrive on providing solutions and first-class service. The enlarged company will provide the platform from which to deliver this to a broader client base.”
Ions added that his firm had been impressed by the quality of the investment teams at GAM, and said Liontrust was committed to the international business and client relationships that the Swiss firm has built.
“The quality of the investment teams across the different asset classes, the talent in the business and the breadth of the distribution at GAM, combined with Liontrust’s existing investment capability and strong brand, sales, marketing, and communications, gives me great confidence we will grow the enlarged business to create long-term value,” he concluded.
GAM CEO Peter Sanderson said: “I am delighted we have agreed this transaction with Liontrust. Our distinctive approaches to investing are closely aligned, and this combination represents the best opportunity for our talented team of professionals at GAM to continue to provide clients with high conviction active investment strategies.
“The resulting business will have a strong balance sheet, a broader array of excellent investment products, and a global distribution footprint from which to deliver growth that our shareholders can participate in the future.”
This story first appeared on our sister publication, Portfolio Adviser.