The crisis at Swiss asset manager GAM continues. Another profit warning, a postponement of annual results, and now the partial withdrawal of a major shareholder. One industry observer wonders if a turnaround is possible.
At the beginning of 2018, all was well at GAM. The share price was around 17 Swiss francs, total assets under management were around 160 billion francs ($173.4 billion), and a net profit of 123 million francs for 2017.
But then the problems began with the suspension of fund manager Tim Haywood, fund closures, several management changes, and increasingly poor corporate figures manifesting themselves in a continuous downward spiral.
Systematically Driven Aground
In recent months, there has been speculation about a possible takeover of GAM. According to reports, these were serious and deep-pocketed investors willing to commit. But according to sources, the board of directors and management rejected all suitors in a friendly but firm manner.
Once considered a pioneer in the investment business with its innovative products, «GAM was systematically driven into the ground by incompetence,» an industry insider told finews.asia. He doesn't see how the company will manage a turnaround on its own.
Big Losses and Strategy Search
The current management under Chairman David Jacob, who took over in October 2019, and CEO Peter Sanderson, who was appointed in the summer of 2019, has so far not been able to pull the firm up out of its nosedive. Last year, preliminary estimates foreshadowed a net loss of about 310 million Swiss francs for 2022. Even with cost reductions and job cuts, the pre-tax loss widened to 42.8 million francs from 9.6 million francs previously.
Further key figures have not yet been disclosed. But the nine-month figures for assets under management had also shown further declines. Assets under management at the end of September were 24.2 billion francs in Investment Management and 50.4 billion francs in fund management services.
Investor Reduces Stake
News that one of GAM's major investors further reduced its stake deals a further blow to confidence in the company. German-Swiss investment company Bantleon reduced its stake to 4.24 percent from 9.41 percent, GAM announced Thursday. The stake held by Bantleon had already fallen below the 10 percent threshold in October, down from a previously reported 11.13 percent.
Bantleon prefers to rely on its asset manager acquired in Germany. «In the future, we want to focus on our recently announced acquisition of the former NORD/LB Asset Management, now Warburg Invest,» a press spokesman told finews.com. «As part of the risk management for our overall investments, we have decided to reduce our financial investment in GAM to a share of less than 5 percent.» The shares were sold through the market.
Finite Shareholder Patience
That shareholders' patience with GAM is finite was reflected in the share price in October when it hit a low of 69 centimes. Since then, shares have recovered to just below one franc. But the profit warning and Bantleon's lightening its holdings weighed again on the price. Currently, the shares can be bought for 92 centimes.
The strategy review now proposed by Jacob to be presented together with the postponed annual figures at the end of April is not exactly raising shareholders' hopes. Three months is a long time in the financial markets.
