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GAM held takeover talks with Zürcher Kantonalbank
Troubled asset manager under pressure to find a buyer after failing to recover from 2018 scandal
Switzerland’s Zürcher Kantonalbank has held takeover talks with GAM, the troubled asset manager that delayed its results as it races to find a buyer this month.
ZKB, the largest of Switzerland’s state-owned cantonal banks, has had discussions with GAM in recent months about acquiring the business, according to people familiar with the situation.
GAM, which comprises an investment management arm and a fund services division, in February pushed back the release of its annual results to find extra time to secure a sale. The asset manager is due to release its results on Tuesday.
ZKB and Liontrust, a UK boutique fund manager, are among several potential suitors for GAM, which has endured a spectacular fall from grace since a scandal over its holdings of illiquid debt rocked the company in 2018. Its share price has plunged more than 95 per cent since the start of 2018, and last year the group hired UBS to help sell the business.
ZKB said that it “is constantly examining opportunities within its business development strategy” but declined to comment on “rumours”.
London-listed Liontrust disclosed earlier this week that it was in talks with GAM but cautioned that it may not lead to a formal offer.
Another investment firm, New York-based Z Capital Group, has also shown interest in buying GAM, according to a person familiar with the matter, as it seeks to expand its asset management business. Z Capital Group declined to comment.
GAM said earlier this month that the “board is working tirelessly on options to ensure that the firm is strategically positioned in the best interests of all stakeholders”.
One banker said that GAM was “quite a complex business” made up of a fund administration division that services third parties as well as its own investment management arm.
Once one of Europe’s biggest asset managers, GAM’s troubles began in July 2018 when it suspended former star fund manager Tim Haywood with little explanation, prompting investors in its Absolute Return Bond funds, which Haywood managed, to rush for the exit.
It later transpired that Haywood had bought bonds relating to Lex Greensill’s now collapsed supply chain finance business Greensill Capital, which counted former UK prime minister David Cameron as an adviser. Insiders at Zurich-based GAM had voiced concerns about Haywood’s relationship with Australian financier Greensill, which ultimately led to the liquidation of the funds.
Chief executive Alexander Friedman stepped down while Haywood was subsequently fired. In 2021 GAM was fined £9.1mn by the UK’s Financial Conduct Authority for conflicts of interest.
While GAM has never recovered from the scandal, the company said its funds have performed well, pointing out in January that more than half of its largest products were ranked in the top decile over the past three years.
Gapping up
In reaction to earnings/guidance:
- HCA +5.7%, CSX +2.6%, OZK +2.5%, PG +2.1%, VMI +2% (also $400 mln share repurchase reauthorization and a 9% dividend increase), ASB +2%, HTH +1.7%, SAP +1.6%, FFBC +1.3%, PPG +0.8%
Other news:
- WISH +17.7% (authorizes new $50 mln share repurchase program)
- CANG +5.3% (authorized $50 mln new share repurchase program)
- MDXH +4.9% (received notice that its Select mdx for Prostate Cancer test has successfully completed a rigorous technical assessment process with the Molecular Diagnostics Services (MolDX) Program developed by Palmetto GBA.)
- AMTD +3.6% (secured $93.6 mln of investment at 21.07% premium above prior day's closing price)
- LMAT +3.4% (to distribute AZYO's cardiovascular patches in the US)
- SPRY +2% (stock offering byselling shareholders)
- ASPN +1.6% (suing Korean supplier for patent infringement)
- JANX +1.6% (first patient dosed in Phase 1 trial of JANX008)
- AXTA +1.5% (in sympathy with PPG earnings)
Analyst comments:
- T +0.9% (upgraded to Buy from Hold at HSBC Securities)
Gapping down
In reaction to earnings/guidance:
- ALV -4.3%, CNXN -3.7%, WRB -3%, OCFC -2.7%, GBCI -0.9%, XM -0.9%, KNX -0.7%
Other news:
- BHP -3.5% (provides nine-month operations update)
- BAM -1.8% (exploring possible counterbid for Network Intl according to WSJ)
- PKE -1.8% (enters into cooperation agreement with activist firm)
- PFG -1.5% (reports March AUM)
- SSL -1.5% (provides quarterly update and provides outlook)
- NAVI -0.7% (files mixed shelf securities offering)
Analyst comments:
- BIG -6.4% (downgraded to Underweight from Neutral at Piper Sandler)
- OSTK -3.2% (downgraded to Neutral from Overweight at Piper Sandler)
Early premarket gappers
- Gapping up:
- WISH +22.8%, MDXH +8.6%, AMTD +8.3%, CANG +6.1%, ASB +4.6%, LMAT +3.4%, VMI +3.2%, SPRY +2%, HTH +1.7%, CSX +1.7%, ASPN +1.6%, JANX +1.6%, FFBC +1.3%, SAP +1.3%, OZK +1.2%, AXTA +0.9%, UAL +0.6%, TMUS +0.5%
- Gapping down:
- CNXN -4%, ALV -3.8%, BHP -2.9%, OCFC -2.7%, WRB -2.4%, BAM -1.8%, PKE -1.8%, RF -1.6%, PFG -1.5%, SSL -1%, GBCI -0.9%, XM -0.9%, NAVI -0.7%, KNX -0.7%
>>> Up
* Arjo Raised to Hold at Pareto Securities; PT 42 kronor
* IMI Raised to Buy at HSBC; PT 1,960 pence
* IMI Raised to Buy at HSBC; PT 1,960 pence
* Mediobanca Raised to Hold at Deutsche Bank (+)
* Mensch und Maschine Raised to Buy at Bryan Garnier; PT 62 euros (+)
* Nokia Raised to Buy at Inderes; PT 4.80 euros
* TUI Raised to Buy at Redburn
* Veolia Raised to Buy at Deutsche Bank; PT 33 euros (+)
>>> Down
* DNB Bank Cut to Neutral at Citi; PT 213 kroner
>>> Down
* DNB Bank Cut to Neutral at Citi; PT 213 kroner
* GenSight Biologics Cut to Neutral at Chardan Capital Markets
* GenSight Biologics Cut to Neutral at Bryan Garnier (+)
* Seagate Cut to Equal-Weight at Morgan Stanley; PT $60
* Severn Trent Cut to Hold at Deutsche Bank (+)
>>> Initiation
* Adyen Rated New Outperform at CICC; PT 1,770.35 euros
>>> Initiation
* Adyen Rated New Outperform at CICC; PT 1,770.35 euros
* Alfen Rated New Buy at Deutsche Bank; PT 100 euros (+)
* Elementis Resumed Equal-Weight at Barclays; PT 141 pence (+)
* Fastned GDRs Rated New Buy at Deutsche Bank; PT 50 euros (+)
* XXL Reinstated Sell at Nordea; PT 1.80 kroner
>>> Call
* Swedbank Gets Positive Catalyst Watch at Citi, DNB Downgraded
>>> Call
* Swedbank Gets Positive Catalyst Watch at Citi, DNB Downgraded
* Tele2’s 1Q Ebitda Miss Driven by Sweden, Morgan Stanley Says
* TUI Gains as Redburn Lifts to Buy on Much-Improved Business (+)
- Mercedes (MBG TH) +2.9%
- Mercedes Beats Earnings Estimates by Charging More for Its Cars
- BMW (BMW TH) +1.4%
- Tesla Price Cut Concern for BMW, Mercedes as Supply Normalizes
- Anglo American (NGLB TH) +1.2%
- Watch European Miners as Iron Ore Price Slips to December Low
- Porsche Automobil (PAH3 TH) +1.1%
- VW (VOW3 TH) +0.8%
- Tesla Price Cut Concern for BMW, Mercedes as Supply Normalizes
- Renault (RNL TH) +0.8%
- Stellantis (8TI TH) +0.8%
- Thyssenkrupp (TKA TH) -0.8%
- Aurubis (NDA TH) -0.8%
- HelloFresh (HFG TH) -0.9%
- HelloFresh Reader Interest Increases
- Repsol (REP TH) -1.1%
- Telefonica Deutschland (O2D TH) -1.4%
- SAP (SAP TH) -2.1%
- SAP Sees Full-Year Profit Beating Estimates on Cloud Gains (1)
- Genmab (GE9 TH) -3.2%
- Genmab: Tribunal Dismissed Claims vs Janssen Over Daratumumab
DAX:
- Mercedes (MBG TH) +3%
- Mercedes Beats Earnings Estimates by Charging More For Its Cars
- Porsche Automobil (PAH3 TH) +1.4%
- BMW (BMW TH) +1.3%
- Continental (CON TH) +1.3%
- SAP (SAP TH) -1.9%
- SAP Sees Full-Year Profit Beating Estimates on Cloud Gains (1)
MDAX:
- No major mover
SDAX:
- MorphoSys (MOR TH) -1.5%