GAM to be acquired by Liontrust, funds to rebrand likely including cat bonds

GAM Holding AG, the parent company to global asset manager GAM Investments, is to be acquired by specialist fund management group Liontrust, with all of its investment funds set to be rebranded, which will presumably include its large GAM Star Cat Bond Fund and other ILS strategies it manages.

Liontrust said it has conditionally agreed to acquire the entire issued share capital of GAM Holding AG.

Through the GAM Investment Management division, the company has around CHF 23.3 billion (£20.9 billion) of assets as of 31 March 2023.

Combined with Liontrust, the scale grows significantly, with the combined asset manager set to have around UK £53 billion of assets under management.

Liontrust has a strategic objective to diversify its range of fund strategies, with alternatives one target area.

The acquisition will significantly broaden its fund and asset class offering, bringing a number of new large strategies under the Liontrust name.

Liontrust said, “GAM’s existing product offering is complementary to Liontrust’s especially in fixed income and alternatives.”

Adding that, “GAM will strengthen Liontrust’s fixed income offering, adding capabilities in: Asset Backed securities, Emerging Markets debt, Global Credit, Global Rates, Catastrophe bonds and Insurance Linked Securities.”

The asset manager also said, “Liontrust intends to rebrand all GAM funds as Liontrust as soon as possible after completion of the Proposed Acquisition and for the GAM business to operate under the Liontrust brand.”

Of course, GAM Investments offers the GAM Star Cat Bond Fund, which is the largest UCITS catastrophe bond fund in the marketplace.

That cat bond fund strategy is portfolio managed by recognised insurance-linked securities (ILS) firm Fermat Capital Management, one of the leading market names.

As we reported recently, the largest of the UCITS cat bond funds at the end of Q1 2023 was the Fermat Capital Management portfolio managed GAM Star CAT Bond Fund at $2.67 billion.

This morning, GAM highlighted the cat bond fund strategy as a particularly positive area for the company, with net inflows to that ILS fund in 2022 helping to offset outflows to other strategies in emerging market bonds and credit.

The GAM Board said that it unanimously recommends the Liontrust acquisition, saying that the combined firm can “deliver growth” and offer stability and support to GAM as part of a larger asset management group, while bringing a broader and more diverse range of investment strategies to both firm’s clients.

For the GAM Star Cat Bond Fund strategy and other insurance-linked securities (ILS) offerings, it seems likely these will be rebranded to Liontrust, possibly to the Liontrust Star Cat Bond Fund.

We feel it’s likely Fermat Capital Management, having managed that GAM cat bond fund since its launch for now more than a decade, would be expected to continue to as the portfolio manager and adviser to the cat bond strategy.

The proposed acquisition is expected to close in the fourth-quarter of 2023.

Analyse UCITS catastrophe bond fund asset growth using our charts here.

John Ions, Chief Executive of Liontrust, commented “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.

“We have been impressed by the quality of the investment teams at GAM. There is commonality in that Liontrust and GAM are both committed to independent and distinct processes for each of their investment teams. Liontrust specialises in providing an environment in which investment teams can thrive, including through the excellence of our sales and marketing and a robust business infrastructure, strong risk and compliance culture, and the stability that comes with financial strength.

“Liontrust is committed to the international business and client relationships that GAM has built. We are especially pleased to have such a strong operation in Switzerland which has been so important to GAM’s heritage.

“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.

“Liontrust and GAM will work together to provide a seamless transition for clients and enhancing the service provided in the future.”

Peter Sanderson, CEO of GAM, added, “I am delighted we have agreed this transaction with Liontrust. Our distinctive approaches to investing and culture 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.”

David Jacob, Chairman of GAM, also said, “I would like to thank all my colleagues at GAM for their hard work and dedication while we worked to determine the best option for the future of the firm. I am confident that the loyalty of our clients will be rewarded since they will now benefit from the increased capabilities and stability of the combined firm. Our shareholders have been patient, and I and my fellow Board members are unanimous in our recommendation that they should tender their shares in response to the offer from Liontrust.”