GAM, the investment manager that recently suspended trading in its unconstrained absolute return bond funds, said it will pay back investors in cash on potentially 87% of fund assets at the start of the liquidation process, which is now beginning.
GAM said on Monday (28th) that relevant approvals had been gained for the liquidation process to start and that all fund investors will receive their proportionate interest in cash.
The liquidation stems from the firm’s July 31 announcement that it had suspended Tim Haywood, investment director from the absolute return bond fund (ARBF) team following an internal investigation involving external counsel.
Each fund expects to be able to make the first payments in early September, returning between 74% and 87% of the Luxembourg and Irish-domiciled Ucits funds, and between 60% and 66% of the assets in the Cayman master fund and the associated Cayman and Australian feeder funds.
GAM expects to make further payments in the coming months, some of which will come after the sale of less liquid assets. The firm is balancing speed of liquidations with value maximisation.
GAM said its priority was to maximise value for the fund investors throughout the liquidation process, while ensuring equal and fair treatment to all.
The firm also said it intended to offer alternative structures for investors who wanted to remain invested with the absolute return bond fund team. A Ucits fund is expected to be available for investors “in the coming weeks”, and the company is setting up a new Cayman fund as well.
GAM’s investigation into Haywood concluded that Haywood may have failed to conduct or evidence sufficient due diligence on some of the investments that were made, or to make accessible internal records of documents relating to these, the firm said.
Haywood may also have breached GAM’s signatory policy by signing alone on certain contracts where two signatures were necessary and, further, Haywood may also have breached the company’s gifts and entertainment policy by not asking for required pre-approval and may also have used his personal email for work purposes.
Alexander S. Friedman, group chief executive, said: “The suspension and the subsequent decision to liquidate the ARBF funds has been a difficult process, but necessary to ensure that we deliver on our principles of acting in the best interests of all fund investors and treating them equally and fairly. This does not take away from the fundamental strength of GAM as a diversified asset manager.
“We have spent the past few years restructuring GAM into a more efficient business with a less volatile earnings profile, while continuing to build out high performing, specialist strategies that are relevant for our clients. This has made GAM better positioned to weather a challenging environment, and we believe we will continue to attract clients to our platform and deliver value to our investors in the years to come.”
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