The Switzerland-listed firm has cut costs significantly in its bid to restore margins and profitability. Lower fee and commission income was only partly outweighed by the cost cuts, so the underlying loss increased in the first six months of 2024.

Zurich-listed GAM Holding, the investment group that has been restructuring to bolster its financial health, today said it made an underlying pre-tax loss of SFr33.2 million ($38.6 million) in the first half of 2024 from SFr22.5 million the same period in 2023.

The underlying pre-tax loss was caused mainly by lower net fee and commission income being only partially offset by lower personnel and general expenses, GAM said in a statement. On an IFRS basis, GAM suffered a net loss of SFr39.1 million compared with SFr71.2 million for the first half of 2023.

Margins came under pressure. The average management fee margin earned on investment management AuM in H1 2024 was 41.6 basis points, from the average margin for the financial year 2023 of 49.7 basis points and 51.1 basis points for H1 2023. The change in average management fee margin primarily reflects the mix of assets under management across products and sub-advisory agreements with existing and new partners.

Net management fees and commissions in H1 2024 totalled SFr41.6 million, down from SFr68.0 million in H1 2023 due primarily to the sale of the third-party fund services business in January 2024 (see more below), lower average AuM and reduced average management fee margin in the investment management business.

The firm said cost controls caused underlying expenses to fall 20 per cent year-on-year.

Total assets under management stood at SFr19 billion at the end of June, down from SFr19.3 billion from the end of December, 2023. 

Restoring fortunes 
GAM has been restructuring its business in recent years following client outflows prompted by the suspension in 2018, and eventual sacking, of a high-profile manager in 2019.

In August 2023, after UK-listed Liontrust Asset Management's attempt to buy GAM fell through, GAM agreed with investment groups NewGAMe and Rock Investment SAS to extend immediate short-term financing of SFr20 million to cover GAM’s liquidity needs. Rock is a French-incorporated entity that is owned by NJJ Holding, the personal holding company of Xavier Niel, a wealthy French businessman. It is part of the NewGAMe group of investors consisting of NewGAMe SA and Bruellan SA.

As reported in mid-July, GAM has transferred its management company activities in the UK, Ireland and Luxembourg to Apex Group, a financial services business. In January, it sold its third-party funds services business to Carne Group.

In other developments, GAM said: "We established a strategic alliance with Sun Hung Kai & Co Ltd to grow our client base, distribute our products, and innovate our alternatives offering across the Greater China region. We have also enhanced our regional presence and client coverage by hiring new heads of distribution for key markets, building out client teams, and we are opening new offices in Miami and Paris."

GAM said it had logged “strong investment performance” with 79 per cent of the assets it manages beating their benchmark and 88 per cent beating their benchmark over a three-year and five-year period, respectively.

European equity strategies attracted positive net inflows along with some net inflows across other strategies. Overall, net outflows totalled SFr1.8 billion for the first half of 2024, GAM said.

Capital hike
GAM expects to launch an ordinary capital increase by way of a rights issue of up to SFr100 million, fully underwritten by an anchor shareholder. It is expected to be launched late in the third quarter or early in the final three months of this year.

The existing SFr100 million loan facility will remain in place until June 2025 with a possible maturity extension granted by Rock Investment SAS/NJJ Holding SAS if required.  

“We have made great progress in implementing our turnaround strategy and building the foundations for future growth and sustainable profitability,” Elmar Zumbuehl, group CEO at GAM, said. “Our investment performance remains strong, and we are focused on our clients, enhancing distribution and launching new distinctive products, all to drive future positive net inflows. We are targeting to achieve profitability in fiscal year 2026."

Anthony Maarek, managing director of NJJ Holding SAS said: “NJJ Holding is a committed long-term strategic shareholder of GAM, providing stability and support for its growth strategy. We have fully underwritten the rights issue and we are ready to extend the loan facility if needed.”