ZURICH, July 13 (Reuters) - GAM Holding AG will take an impairment charge of around 59 million Swiss francs ($58.9 million) related to its 2016 acquisition of British hedge fund Cantab Capital Partners, the Swiss group said while flagging a sharp drop in first-half profit.
The writedown reflects “lower assets under management and cash flows compared with those forecast at the time of the Cantab acquisition”, it added in a statement on Friday.
“Despite this impairment, GAM continues to see broader growth of the GAM Systematic Cantab platform driven by new product launches,” it said.
Its shares were indicated around 2.8 percent lower.
GAM had paid $217 million upfront for Cantab and linked more payments to management fee revenues. [here ]
GAM said it expected a related reduction in the Cantab deferred consideration liability of around 30 million francs in the first half.
“Taken together with previously recognised adjustments, the reduction in the deferred consideration liability since the 2016 acquisition is expected to amount to approximately 57 million francs,” it said.
GAM said it expected the one-off items to push first-half IFRS net profit down to around 25 million francs from the 67.7 million francs it reported in the year-earlier period.
It saw underlying profit before taxes of approximately 91 million francs, up from 75.4 million a year ago.
Final results are due on July 31. ($1 = 1.0025 Swiss francs) (Reporting by Michael Shields, editing by John Revill)