Swiss asset Manager GAM said profits fell sharply in the first half – the result of the pricey acquisition of a computer trading firm based in Cambridge's «Silicon Fen». 

The Zurich-based company expects profit of 25 million Swiss francs ($25 million), less than half of the 67.7 million francs it recorded in the year-ago period, GAM said in a statement on Friday.

The profit warning is the result of GAM's acquisition of Cantab, a mechanical trading firm based in Cambridge's «Silicon Fen» tech hub which the Swiss firm snapped up in 2016 for $217 million plus a 40 cut of future fees.

Now, GAM is writing down 59 million francs for Cantab after lowering its forecasts for cash flows and assets under management from the deal.

Rich Deal Price

But GAM will also pay 30 million francs less for Cantab: the purchase price had been staggered over several years. Taken together with other reductions already taken, GAM will pay 57 million francs less than the originally agreed deal.

«GAM continues to see broader growth of the GAM systematic Cantab platform driven by new product launches», the asset manager said. Assets under management had suffered since the deal two years ago, but not more than the wider industry, GAM CEO Alex Friedman said, citing investor shyness for high-volatility hedge funds.

The profit warning illustrates that GAM's forecasts were too upbeat, and Cantab's deal price too rich. The firm will report full results including Cantab, which manages roughly $4 billion, on July 31.