Source - Alliance News

Liontrust Asset Management PLC suffered over £3 billion worth of outflows in its first half as it grapples with a ‘challenging period’ for the sector and goes back to the drawing board after failing in its bid to acquire Zurich-listed GAM Holding AG.

Liontrust reported assets under management and advice of £27.65 billion at its September 30 half-year end, down 12% from six months earlier. It reported £3.21 billion worth of net outflows during the period, worsening from £2.2 billion for the first half of its prior financial year.

Assets under management and advice have since weakened further to £26.6 billion as at November 9.

‘This has been a challenging period for the asset management sector, including Liontrust,’ Chief Executive John Ions said.

‘Our focus is clear and we are committed to navigating the current headwinds and emerging with the business stronger than ever. There are a number of areas we are prioritising to achieve our strategic objectives. We are seeking to further broaden our investment talent and product offering, which follows an optimisation of the current fund range. We have closed and merged a number of funds, launched the GF Sustainable Future US Growth Fund and will offer an Irish-domiciled version of the European Dynamic Fund in the first quarter of 2024.’

Liontrust reported first-half revenue of £104.5 million, down 10% year-on-year from £116.8 million. It swung to a pretax loss of £10.1 million from profit of £14.1 million a year prior.

It maintained its first interim dividend at 22.0 pence per share.

Non-Executive Chair Alastair Barbour said: ‘No company enjoys linear growth over many years. There will inevitably be bumps, twists and turns along the way. While Liontrust has been going through a less comfortable part of the journey after delivering many years of rapid growth, the group has a robust strategy and a clear plan for how management intends to deliver it.

‘We understand the reasons for the net outflows of £3.2 billion over the first half of the financial year. Key drivers are Liontrust’s bias towards quality growth investing and small and mid caps, along with a significant proportion of our AuMA being invested in the UK stock market, which have all been negatively impacted by investor sentiment. In the first nine months of 2023, for example, UK All Companies was the worst selling Investment Association sector in eight of those months.’

Liontrust announced an all-share deal to acquire GAM in May, at the time valuing the company at fr.107 million, around £97.0 million. Liontrust said the offer was equivalent to fr.0.67 per share. GAM shareholders would have just shy of a 13% stake in the enlarged firm.

But it said in August that it expected the bid to be unsuccessful.

The sternest opposition to the Liontrust buyout of GAM came from French telecommunications billionaire Xavier Niel, through NewGAMe SA. NewGAMe is controlled by Rock Investment, which is itself owned by NJJ Holding, Niel’s personal holding company. NewGAMe, alongside Geneva-based wealth manager Bruellan, back in May said Liontrust’s offer undervalued GAM.

The opposition at times descended into a feud between Liontrust and NewGAMe. NewGAMe once said Liontrust grew ‘more desperate by the day’. It also accused Liontrust CEO Ions of ‘more and more aggressive tactics which are bordering illegality’.

Liontrust believed plans by NewGAM for GAM were ‘so long on rhetoric and so short on detail’, however.

Liontrust Chair Barbour said on Thursday: ‘Liontrust is not waiting passively for the cycle to change, however. The group is focused on broadening the fund range and investment teams, expanding the asset classes and investment styles managed by Liontrust, increasing global distribution, enhancing further the investor experience and strengthening the operating model and infrastructure.

‘It was in pursuing this strategy that we made the decision to seek to acquire GAM. Having carefully considered the proposed acquisition, we decided it was the right deal to accelerate our stated strategy, especially in broadening our fund range and global distribution and enhancing our business infrastructure. The board is pleased that Liontrust attempted to acquire GAM and then remained resolute in sticking to a price that we believe was fair for the value of the business, recognising the costs it would have entailed. This is a better outcome than completing a deal for the wrong price for Liontrust.’

Shares in Liontrust were down 1.0% at 596.50 pence each in London on Thursday morning.

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