Xavier Niel-led group to lift stake in Swiss asset manager GAM

An investor group led by French billionaire Xavier Niel plans to lift its stake in asset manager GAM beyond 10 per cent, a move that threatens the sale of the troubled group to UK rival Liontrust.

The investor group said on Tuesday that it would notify the Swiss Financial Market Supervisory Authority of the plan to increase its holding in GAM, a once high-flying asset manager, from 8.4 per cent to more than 10 per cent of GAM’s voting rights.

The intervention comes after GAM earlier this month finally reached a deal to sell itself to London-listed Liontrust for £96 million. Just days after the sale was announced, the Niel-led group claimed that the takeover “needlessly favours the bidder and is contrary to the principles of Swiss takeover law”.

Under the deal, Liontrust pledged to keep GAM’s investment management business but sell its fund services arm.

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The Zurich-listed fund group had been searching for a buyer for months following a calamitous five years triggered by a 2018 scandal over its investments in risky debt.

The investor group, which also includes Rock Investment and wealth manager Bruellan, first disclosed a stake in GAM last month, saying it saw “an opportunity to restore [its] reputation as a best-in-class asset management firm”.

It described GAM’s shares as “undervalued” and offering “significant upside”. Shares in GAM were up 5 per cent, but have plunged more than 95 per cent since 2018.

Mr Niel is one of the richest men in France and is known for launching low-cost telecoms operator Free Mobile as well as his investments in technology and real estate. He is Eir’s biggest shareholder.

GAM had been forced to twice delay its annual earnings as it held talks with potential suitors, including Swiss lender Zürcher Kantonalbank.

Liontrust said earlier this month that the acquisition would transform it into a global asset manager overseeing £53 billion. To fund the deal, Liontrust aims to raise money by selling 9.4 million of shares. It will also provide two loans of up to £17.8 million to help restructure GAM.

GAM’s problems arose in 2018 when it suspended former star fund manager Tim Haywood with little explanation, which led investors in Haywood’s Absolute Return Bond funds to exit.

It later transpired that Haywood had bought bonds from companies related to Lex Greensill’s now collapsed supply chain finance business Greensill Capital, which counted former UK prime minister David Cameron as an adviser. Haywood’s funds were ultimately liquidated. – Copyright The Financial Times Limited 2023