GAM Holding AG, parent of global asset manager GAM Investments and home to the world’s largest catastrophe bond fund strategy, has received counteroffers over its impending takeover deal with Liontrust as an investor group has The proposed acquisition of its stock price is at a premium of 29.1% compared to the arrangement.
If the deal goes through, all of GAM’s investment funds, which may include its large GAM Star Cat bond fund and other ILS strategies it manages, will be rebranded.
Liontrust’s stated aim is to diversify its fund strategy, one of its target areas being alternative investments, so GAM Investment Management, with assets of around CHF 23.3 billion (£20.9 billion) as at 31 March 2023, would be a good fit for the asset administrator.
GAM Investments is home to the GAM Star Cat Bond Fund, the largest UCITS catastrophe bond fund on the market, and possibly the largest of any single catastrophe bond fund strategy, with a portfolio comprised of well-known insurance-related securities (ILS) Company Fermat Capital Management Management, one of the leading market names.
As we recently reported, the Fermat Capital Management Portfolio Managed GAM Star CAT Bond Fund is the largest of the UCITS catastrophe bond funds at $2.85 billion as of June 30, 2023.
But not all GAM investors believe the Liontrust deal is in their best interest, so investment groups NewGAMe and Bruellan have made a partial cash offer for 28 million GAM shares for CHF 0.55, which they say represents a premium of 29.1% to GAM’s value . Liontrust offers.
The investor group already holds approximately 9.6% of the issued share capital of GAM Holding AG.
The offer will see the group acquire a further 17.5% of GAM’s issued share capital, representing a premium of 31.9% to the closing price of GAM shares on 17 July 2023.
The investor group noted that Liontrust’s offer included its own stock and therefore believed their cash offer was an improvement.
They said: “The Liontrust offer not only significantly undervalues GAM, but is also subject to execution surprises, which make it very unattractive. The Group believes that GAM can be successfully restructured and return to profitability. Tender offer for its GAM shares and support for the restructuring of GAM. Considering the execution risks of the restructuring plan, the Group still offers the opportunity for GAM shareholders wishing to exit the company to realize part of their investment on attractive terms.”
Albert Saporta, Director of NewGAMe SA, added: “The announced offer provides a partial exit opportunity for shareholders concerned about the lack of alternatives to Liontrust’s inadequate offer. As GAM’s second largest shareholder, we believe the successful restructuring of the company will bring We believe that GAM shareholders will be better off continuing to invest in the company.”
It is unclear at this stage whether the new proposal would put Lions Trust at risk.
If it goes ahead, though, this new acquisition could preserve GAM’s brand name while also retaining the investor base behind the business who appear committed to restructuring the business and returning it to growth.
GAM has not yet responded to the new offer.
