Liontrust: Restructuring on the way after failed GAM bid
Liontrust said it would push through a wave of “restructuring and efficiencies” today after haemorrhaging cash over the summer during its chastening takeover battle for Swiss rival GAM.
In a trading update today, Liontrust chief John Ions said the firm had gained “knowledge and insight” from its failed bid for Swiss money manager GAM, but would now push through changes in some areas of the business.
Liontrust’s months-long £96m takeover struggle for the firm faced fierce resistance from a group of shareholders before collapsing with just 33 per cent of backing from GAM shareholders in September.
“The knowledge and insight gained through the GAM process is also helping us shape our future operating model for the long-term growth of the Liontrust business,” Ions said in a statement, adding that the move would lead to “restructuring and efficiencies” in some areas of the business.
“Our flexible remuneration model for fund managers and other staff remains unchanged in light of the headwinds we are facing; in particular, the revenue share model for fund managers ensures they are fully aligned with the business and investors,” the company said.
The warning of restructuring came as Liontrust revealed it had seen net outflows of £1.6bn in the three months to the end of September as its assets under management plunged by some 6.3 per cent to £27.5bn at the end of September.
Ions said the performance was due to the firm’s bias towards equities and the negative mood gripping London’s markets this year.
“Like many other asset managers, Liontrust continues to face the headwind of current investor sentiment,” he added. “Liontrust has been impacted by our bias towards equities, the quality growth style, mid and small caps and the broad negative sentiment towards the UK.”
Shares in Liontrust dipped three per cent in early morning trading before recovering. The firm has shed more than 50 per cent of its value this year.
Analysts said today there was value for investors who wanted to snap up Liontrust at its current flagging valuation. Investment bank Peel Hunt reiterated its buy rating for the firm today.
“The business is clearly facing cyclical pressures but that the current valuation does not reflect the strength of the core franchise and see re-rating potential when flows stabilise,” analyst Robert Sage said.