A rebel investor group has unveiled a rival plan to challenge Liontrust’s takeover of GAM, a Swiss fund manager. The investors, NewGame and Bruellan, who control almost 10% of GAM shares, argue that Liontrust’s valuation of £94 million greatly undervalues the company. They have proposed a four-part plan that they claim could increase GAM’s value by three to five times over the next two to three years. Additionally, they are calling for the removal of GAM’s current management and board and the appointment of individuals who have a personal stake in the company’s success.
NewGame and Bruellan have urged fellow investors to reject the takeover deal, highlighting its lopsided structure that disadvantageously allocates ownership and assets. While Liontrust boasts £31.4 billion in assets under management (AUM), compared to GAM’s 71.7 billion CHF (£62.3 billion), the investors argue that the terms of the deal still undervalue GAM. They also criticize Liontrust’s poor stock performance over the past 12-24 months.
The investors further claim that Liontrust has a history of value-destructive mergers and acquisitions (M&A), with seven out of eight of their acquisitions being deemed as such. They cite the underperformance of Liontrust shares compared to their peers in the fund management sector and the FTSE 250 Index. In contrast, competitors such as Abrdn, Schroders, and M&G have shown growth over the same period.
NewGame and Bruellan have submitted their opposition to the Liontrust offer to the UK’s Financial Conduct Authority for regulatory approval. They are also seeking authorization in other relevant jurisdictions and await a decision from the Swiss regulator, FINMA.
The investors have outlined their alternative plan, which includes raising 25 million CHF (£22 million) through the issuance of a convertible bond, appointing a new leadership team and board with a personal stake in the company, and restructuring GAM’s cost structure to align it with its current AUM. They also intend to redirect their focus towards attracting ultra-high-net-worth investors and rebuilding their alternatives and wealth management businesses.
Antoine Spillmann, CEO and partner at Bruellan and the proposed candidate for chairman of GAM’s board, emphasizes the undervaluation of GAM by Liontrust and asserts that a successful turnaround could generate substantial benefits for all stakeholders. He urges GAM shareholders not to accept the dilutive and value-destructive Liontrust offer.
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