GAM bled nearly $4 billion in client assets so far this year. The Swiss asset manager has struck a deal to sell a series of controversial holdings which sparked a whistleblowing complaint.
Zurich-based GAM said it lost 4 billion Swiss francs ($3.9 billion) in assets in the first three months of this year. Its overall assets slid only to 55.1 billion francs, from 56.1 billion at year-end, because of favorable market and foreign exchange swings.
The asset manager is fighting for its survival following a bumbled whistleblowing scandal which took out a flagship bond business. It is cutting at least 90 jobs – including well-known fund managers – and suspended dividend payouts in a turnaround effort under emergency CEO David Jacob.
Its three-month results are a key bellwether of how promising the effort is: GAM said clients pulled 800 million francs from fixed income strategies, which is its traditional strength.
British Deal
In equities, withdrawals totalled 2.3 billion, while a systematic trading unit based on the 2017 acquisition of British Cantab suffered 100 million francs in redemptions. GAM said it is making good progress on selling the assets of its absolute return bond fund business, which sparked its current troubles.
It said it agreed with GFG Alliance to sell all outstanding power purchase receivables notes held in accounts invested in absolute return strategy – the notes were what sparked a fallout between the two fund managers of the portfolio, as finews.com reported exclusively in September.
Returning Client Money
The deal with GFG, which is controlled by British billionaire Sanjeev Gupta, is expected to close by mid-July. It will conclude the series of asset sales that GAM undertook when it first gated, then began liquidating the absolute return strategy assets.
GAM said it eventually expects to return between 99.6 and 101.0 percent of those assets to clients, and can deliver 40 million in spending cuts by year-end. «We look forward to putting this difficult period behind us», CEO Jacob said.
The company said an appeal lodged by Tim Haywood, who used to manage the bond fund, is ongoing. Both Haywood as well as his ex-co-fund manager who blew the whistle on him were let go earlier this year.
