ZURICH (Reuters) - GAM Holding (GAMH.S) has finished liquidating the absolute return bond funds (ARBF) linked to a sacked senior executive, a move seen by analysts as the first stage in rebuilding confidence in the Swiss asset manager.
The repayment to customers - at an average of 100.5% of net asset value - could ease a potential takeover of the Zurich-based company and its search for a permanent chief executive, analysts said.
GAM’s interim CEO David Jacob thanked clients for their patience since the liquidation process began last September.
“We are fully focused on further stabilising the business for future growth, executing our restructuring programme and delivering value for our clients and shareholders,” he said.
GAM was hit by an investor exodus after it suspended and then fired Tim Haywood for breaching company rules. Haywood has vowed to clear his name.
The company decided to wind down the 11 billion Swiss francs (£8.98 billion) in ARBF investments Haywood oversaw and has now received the proceeds which will be returned to clients by the end of July.
Analysts saw the move as a positive for GAM, whose shares plunged 75% last year, because it removed the risk of potential legal action by disgruntled clients.
“The small risk of legal action has now disappeared. These funds could have been a deal-breaker for someone looking to buy GAM, but now it’s been resolved,” said Michael Kunz, an analyst at Zuercher Kantonalbank.
He said the chance of GAM attracting a buyer without settling the funds issue was “close to zero,” although it was still a long shot a buyer could be found.
“GAM doesn’t have many assets left and they are spread around across many different asset classes,” Kunz said.
GAM, which is due to report its earnings on July 30, said last week its assets under management had stabilised at around 136 billion francs, still down from 163.8 billion in June 2018.
Andreas Venditti, an analyst at Bank Vontobel, said repaying the money was the first stage of restoring confidence among investors by showing the company had taken care of them and not caused them losses.
“It was a prerequisite for rebuilding confidence and now they have to prove they can still perform with the funds they still have,” he said.
It could also help the search for a permanent CEO to replace David Jacob, who has been leading since November.
“The next interesting stage will be who they appoint as their permanent CEO. I would be surprised if they brought in a high profile external candidate just for the company to be taken over a few months later,” Venditti said.
Reporting by John Revill; Editing by Shri Navaratnam and Mark Potter