UPDATE 3-Julius Baer splits operations, unlocks value

Thu Oct 1, 2009 5:31am EDT

* Private bank at 38.48 Sfr, GAM at 13.76 francs

* Group closed at 51.75 francs on Wednesday (Adds trader comment, updates shares)

By Martin de Sa'Pinto ZURICH, Oct 1 (Reuters) - Julius Baer split asset management unit GAM Holding Ltd GAMH.VX from its core private banking operations, Julius Baer Group Ltd BAER1.VX, and listed them separately on the Swiss stock exchange on Thursday.

The move was intended to unlock value for Baer shareholders, who saw an immediate gain in early trading, and to allow both businesses to sharpen their focus.

"The separation of the Julius Baer Group gives GAM Holding Ltd increased strategic flexibility to achieve the full potential of our business, whilst allowing us to continue to benefit from our relationship with Julius Baer private bank," said GAM chairman Hans de Gier in a statement.

Private bank Julius Baer traded at 38.48 Swiss francs at 0913 GMT, while GAM was at 13.76 francs in brisk trade. The GAM shares were up around 9.6 percent from their opening price.

"The demand for GAM is pretty big," a Zurich-based trader said. "That means the stock could for the time being continue profiting from funds, index trackers, financial investors and others building positions."

The defunct shares in the old group closed at 51.75 francs on Wednesday, indicating shareholders had made gains of just under 1 percent with the separate listings.

"The current prices seem to be close to our expectations. JB group has stayed more or less where it opened, while for GAM the valuation range was broader, showing uncertainty was a bit higher," said ZKB analyst Andreas Venditti.

Vontobel analyst Tobias Bruetsch said in a research note he especially liked the focus of Baer group on its core private banking activities, where growth should be supported by hiring new client relationship managers and acquisitions, but was more cautious on GAM.

"The company will become an independent asset manager and, in our view, faces several challenges. We assume that GAM may well become a target of takeover speculation," he wrote.

Julius Baer, a possible buyer of Dutch rival ING Group NV's (ING.AS) private banking assets, said last week it would consider buys at home and abroad. [ID:nLP375932]

GAM has also indicated it wants to play a role in industry consolidation.

The long-announced split came just a week after Baer group sold half its stake in its U.S asset management arm Artio Global ART.N via a U.S listing, boosting its acquisition war chest.

Shareholders in Julius Baer group received one share in the private bank and one share in GAM for each of their old shares.

The private bank had 142 billion francs ($138 billion) under management at June 30, while GAM managed 156 billion francs, though assets in its once fabled fund of hedge funds segment tumbled during the year, data showed. ($1=1.028 Swiss Franc) (Additional reporting by Jason Rhodes, Rupert Pretterklieber; editing by Will Waterman)

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