Arpad Busson will become chairman of Gottex Fund Management Holdings Ltd. (GFMN) after selling his EIM SA hedge-fund investment firm to the Swiss asset manager in an all-stock transaction.
Gottex will pay about 31.5 million Swiss francs ($36 million) in shares for EIM, the Lausanne, Switzerland-based company said in a statement today. EIM investors will own as many as 14 million Gottex shares, giving them a stake of about 30 percent in the new group, according to the statement.
EIM’s assets fell to about $3 billion at the end of September from more than $14 billion before the 2008 global financial crisis. Pension funds, endowments and sovereign wealth funds have been increasingly bypassing EIM and its competitors to invest in hedge funds directly, leading to a wave of tie-ups in the fund-of-funds industry to lower costs.
“Consolidation is the name of the game for everybody in the industry,” Gottex Chief Executive Officer Joachim Gottschalk, 66, said in an interview, adding there may be some job cuts following the deal. “The cost base for regulation and in general is not on the way down. It is on the way up.”
The new group’s fee-earning assets are seen reaching “close to” $10 billion by the first half of 2014, “spanning across investment, advisory and risk-management solutions,” according to the statement. The transaction, which requires regulatory approval, may generate cost savings of as much as $12 million compared with the second half of 2013.
Gottex rose 8.9 percent to 2.45 francs at 12:48 p.m. in Zurich. The shares have fallen 11 percent this year, valuing the company at about 84.5 million francs.
The board proposed that Busson, 50, who founded Nyon, Switzerland-based EIM in 1992, will become chairman, while Gottschalk remains CEO. EIM’s Eric Bissonnier and Hywel Evans will join as co-chief investment officer and corporate counsel, respectively, according to the statement. Both will serve on the combined company’s executive management committee.
The transaction will give the new group an asset base that will help it attract investments from pension funds, endowments, insurance companies and sovereign-wealth funds, Busson said.
“To be in the very exclusive club of about $10 billion, shows scale and strength,” he said in an interview today. “I’m committed to the long term.”
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