Restructuring measures begin to take effect at Swiss asset manager GAM but profitability is still a long way off.
GAM recorded a net loss after taxes of 39.1 million Swiss francs ($45.1 million) in the first half of 2024, according to the asset manager's financial results, down from 71.2 million francs during the same period last year. This was primarily due to an operational net loss after taxes of 33.4 million francs and non-core items of 5.3 million francs, which were mainly restructuring costs.
While the numbers are still in the red, a gradual improvement is becoming apparent.
Capital Increase by the Fourth Quarter at the Latest
To achieve greater financial stability, the Zurich-based firm is aiming for a capital increase of up to 100 million francs, fully underwritten by anchor shareholder Rock Investment SAS. At the general meeting in May 2024, shareholders approved a corresponding proposal. This step is expected to be completed by the end of the third quarter or the beginning of the fourth quarter, GAM said.
As a result, Rock Investment SAS will become the majority shareholder of GAM.
Sale of Third-Party Fund Business
Furthermore, GAM made additional progress in restructuring its business in the first half of the year. It envisions its future as an independent, active pure-play investment manager and wealth manager headquartered in Switzerland with a global presence.
Its third-party fund administration business was sold to the Carne Group in January this year. Additionally, GAM will no longer provide Management Company Services (ManCo) and has ceased related activities in Luxembourg, Switzerland, Dublin, and the United Kingdom.
Instead, GAM has restructured its Global and Emerging Market Equities teams and established a multi-asset competence center to optimize its investment capabilities and adapt to changing market dynamics and client requirements.
Profitability Only by 2026
All these measures are slowly showing results. Personnel expenses were reduced by 18 percent to 40.1 million francs compared to the previous year. Personnel costs decreased by 18 percent.
As of 30 June 2024, assets under management amounted to 19 billion francs, down from 19.3 billion francs at the end of 2023. Net outflows of 1.8 billion francs were partially offset by positive market and currency developments of 1.6 billion Swiss francs.
The company expects to return to profitability in 2026.