An activist investor is pushing for GAM Holdings to take steps to stop further outflows of capital following a major restructuring and executive shakeup at the Swiss asset management firm.
Krupa Global Investments, a Prague-based activist firm that owns a one percent stake in GAM, is asking the company to transparently define its strategy as it moves on from the troubles that began last July related to its unconstrained/absolute return bond funds.
Krupa is also asking that the company “take responsibility for non-standard procedures that have caused a significant decline of the company’s value,” according to a statement published on its website.
GAM’s issues started in 2018 when it liquidated its unconstrained/absolute return bond funds and fired the director of those funds, Tim Haywood, for allegedly failing to conduct sufficient due diligence on certain investments. As a result, the company lost assets and high-level staff. It has since been working to complete a comprehensive restructuring process.
“These events had a huge negative impact on the GAM’s value and KGI has justified doubts about the current situation in the company GAM and its further development,” a statement published alongside Krupa’s letter said.
GAM has declined to respond to Krupa. But a source familiar with the matter said that the firm will meet with Krupa next month.
According to a statement published Monday on GAM’s website, the firm is in the process of settling the sale of the remaining assets from the unconstrained/absolute return bond funds, which was announced in April.
Krupa’s letter to GAM included several questions, such as “what steps are you taking to stop further outflows of money from your funds?”
“We also demand that Tim Haywood shall take responsibility for his actions,” the statement said. The activist is seeking details on Haywood’s compensation and argued that he should compensate GAM for damages.
[II Deep Dive: Soros Investment in Troubled GAM Sends Shares Soaring]
Krupa also wants to know whether there were other findings from the Haywood investigation beyond what has been disclosed and whether the firm plans to audit all its portfolio managers following the news.
Krupa was established as an “opportunity business spin-off” of Arca Capital, and manages €2 billion (US$2.25 billion), according to its letter.