Liontrust said the provisional agreement increases the range of its funds, widens its footprint and will be positive for its earnings once the initial transaction cost and reorganisation process is taken into account. There has been speculation that a deal was on the cards.

UK-listed Liontrust, the fund management group, has provisionally agreed to buy all of GAM Holding, the asset manager, as recently trailed in the media.

According to a statement from Liontrust yesterday, it will pay for the deal by issuing 9.4 million new ordinary shares. It said that it expects GAM shareholders will own about 12.6 per cent of the enlarged firm once the deal is wrapped up. The proposed acquisition is expected to complete in the fourth quarter of 2023.

As at the end of March this year, GAM’s investment management held assets under management and advisement of SFr23.3 billion ($26.3 billion). On a pro-forma basis, the expanded firm would have £53 billion in AuM/A, Liontrust said.

GAM has been battling to recover its fortunes since Tim Haywood, who managed the ARBF business, was suspended in 2018 amid claims of misconduct (he was subsequently dismissed). Clients pulled money out of the firm. GAM has also seen its fortunes affected by the selloff in global markets during 2022.

In January, GAM said it expected to report an underlying pre-tax loss of about SFr42.8 million ($46.5 million) in 2022, widening from a loss of SFr9.6 million a year earlier.

Liontrust said the deal, before transaction and re-organisation costs, is expected to boost its earnings significantly based on diluted earnings per share for the financial year ending 31 March 2025 (being the first full year post-completion) and in future years.

The UK firm said that buying GAM will expand its fund range and asset classes, including in fixed income, thematic equities and alternatives.

Twelve funds will have assets of more than £1 billion (seven managed by Liontrust and five by GAM) and both asset managers have a heritage of responsible investing, Liontrust said. 

The deal will also expand Liontrust’s distribution footprint globally, because 62 per cent of GAM’s AuMA is sourced from continental Europe while Liontrust is a prominent asset manager in the UK with the sixth strongest brand, it said. The move will also increase Liontrust’s physical presence in Europe.

Liontrust said it intends to rebrand all GAM funds as Liontrust as soon as possible once the acquisition is completed.

A year ago, Liontrust bought UK-based Majedie Asset Management, finally paying £41 million.