GAM is in early stage talks with potential buyers

[Zurich] GAM Holding AG has held informal talks with potential buyers for all or part of the business as it explores options to stabilise the firm after the suspension of a star fund manager, according to people familiar with the discussions.

Talks are at an early stage and may not lead to a sale of the company, said the people, asking not to be named because the matter is private. GAM's board said in August it is looking at all options to increase shareholder value, while it reassures clients and shareholders that the fallout from the allegations of compliance breaches is contained.

GAM shares surged on the news, gaining as much as 17 per cent in Zurich and trading about 14 per cent higher at 8 francs as of 11.59 am local time.

A spokesman for the asset manager, based in Zurich, declined to comment.

GAM's shares have tumbled in recent months, cutting its market value in half over the past year to around 1 billion Swiss francs (S$1.4 billion) as the suspension of Tim Haywood prompted a flood of investor redemptions. That may make it an attractive target for rival asset managers as pressure on fees forces the industry to consolidate.

Last year's merger of two money management giants created Standard Life Aberdeen Plc, and this year has brought with it a flurry of activity as insurers such as Italy's Assicurazioni Generali SpA are seeking to add to their investment units.

With GAM set to update investors on its third-quarter performance later this month, the board is under pressure to draw a line under the turmoil at the firm. The US$165 billion money manager expects to review its profit targets after the client withdrawals, people with knowledge of the matter said last week.

A sale would be one among many options the money manager could pursue to steady the business and ease the pressure. A possible sale could draw interest from French and Italian managers as well as asset management units of banks, the people said.

Bankers have already begun testing buyer appetite among US and European asset managers in case GAM decides to pursue a transaction, four people said last month, even though they said no formal sales process has started for GAM at the time.

GAM is in the process of winding down a total of nine bond funds formely run by the money manager, which held more than US$7 billion in assets. The firm has disclosed that the probe had been going on since November last year, after a internal whistle-blower tipped off management to potential misconduct issues by Mr Haywood.

BLOOMBERG