Disposing of the FMS businesses in Luxembourg and Switzerland is part of the process in which Liontrust has agreed to buy GAM.

GAM Investments, part of Zurich-listed GAM Holding, has agreed to sell its loss-making third-party fund management services (“FMS”) businesses in Switzerland and Luxembourg to Carne Group for €3 million ($3.27 million).

Offloading these businesses is part of the process through which UK-listed Liontrust, the asset manager, has agreed to buy GAM Holding. However, some investors have challenged GAM's strategy. (See a story here.)

“As a loss-making business with a material regulatory capital requirement, irrespective of the Liontrust offer, we have been exploring options for the FMS businesses for some time now. Agreeing to sell them to Carne Group marks an important strategic step for GAM and will allow clients to benefit from uninterrupted service from one of Europe’s leading providers,” Peter Sanderson, CEO of GAM, said. “We conducted an extensive process to find a suitable solution and are confident that this sale to Carne Group is the best possible outcome for all our stakeholders.”

The GAM board thinks that the transactions are in the interests of all stakeholders of GAM and represent the implementation of an important part of the board’s strategic review, the firm said. Referring to the FMS business selloff, the purchase price comprises €2.5 million for the Luxembourg-based firm and €500,000 for the Swiss one. The price reflects reduced assets under management and its loss-making nature. In addition, SFr12.1 million ($13.48 million) of regulatory capital will be released and retained by GAM, resulting in a total financial benefit to GAM of about SFr15 million.

The assets under management of the FMS businesses totalled SFr48.4 billion as at 31 March 2023. After deducting client notified losses, the AuM as at 31 May 2023 totalled SFr36.4 billion. Current run rate revenue, taking into account these client notified losses, is around SFr10.25 million per annum.

GAM Investments said the transactions are expected to close during the fourth quarter of this year. While the sales don’t require shareholder approval, they’re subject to customary conditions for such transactions, including regulatory approvals.

“This is a material step towards fulfilling a condition of the offer from Liontrust Asset Management for all of GAM’s publicly held shares,” GAM said.