Situation
NewGAMe, part of an investor group with a significant stake in GAM Holdings AG (“GAM”), determined that an offer made for GAM by Liontrust Asset Management undervalued shares of the company. In addition to objecting to the offer, NewGAMe advocated for an alternative path that involved blocking the Liontrust offer, providing an alternative bridge financing to the company and electing a slate of directors selected by NewGAMe that would pursue an alternative turnaround plan for the company.
NewGAMe engaged Okapi Partners to assist with strategy and solicitation of GAM investors. Despite obstacles including Swiss law and a geographically dispersed shareholder base, GAM shareholders rejected the Liontrust offer and elected NewGAMe’s alternative slate in September of 2023.
Challenges Faced
- Under Swiss law, shares submitted into tender offers are irrevocable. Okapi needed to compile a comprehensive investor list as quickly as possible and then communicate the message to all investors to initially refrain from submitting their shares while they still had incomplete information regarding the situation at GAM. Okapi explains that additional info would be forthcoming.
- GAM’s shareholder base was spread out throughout Europe, the Middle East, as well as the United States, presenting numerous challenges in any communications campaign.
- The byzantine mechanics of the Swiss (EGM) voting system, combined with the multiple custodial layers resulting from the geographically dispersed shareholder base, resulted in investors having very little time to respond and vote their shares.
- The additional detail of the various voting platforms (ISS, Glass Lewis, Broadridge) and their own internal cutoffs, further limited the voting window for investors. This complication partially explains why GAM had historically had low vote results at their AGMs.
Solutions Presented
- Okapi compiled a comprehensive shareholder list and immediately established lines of communication with Portfolio Managers and Proxy Departments at all identified investors. This effort included mapping the entire custodial chain for each investor (Institution>Global Custodian>Local (Swiss) Custodian). This information would become invaluable later in the solicitation process.
- Given its geographically dispersed nature, the investor list was divided among New York and London teams in order to provide maximum flexibility for communication and to leverage each team’s respective relationships. Investors were cautioned that tenders were irrevocable and to refrain from submitting shares into the Liontrust offer before NewGAMe’s information was presented.
- Once proper “decision makers” were established, Okapi coordinated direct engagement between NewGAMe and investors or handled direct communications where appropriate.
- Okapi worked on messaging and preparation for engagement with the proxy advisory services ISS, Glass Lewis and Swiss provider Ethos. All three recommended in favor NewGAMe nominees at the meeting.
- As the EGM approached, Swiss proxy voting requirements required shareholders wishing to vote to follow a complicated process requiring all investors to provide various information to the company’s registrar prior to the meeting date. In the course of the solicitation, Okapi discovered a number of investors had been unsuccessful in having their votes counted over the past several years. Through our work with investors to get votes registered, Okapi discovered widespread confusion and ignorance of the process to properly register ranging from back offices to brokers and proxy advisor procedures (as well as associated voting platforms). The Okapi team tracked requests for registration and votes against information provided by the company’s registrar. In this way Okapi encouraged investors (and in some cases Global Custodians) to confirm with their custodians that shares were in fact registered and ensure they were doing all they could to get the votes counted. In certain cases, agents of custodians sent messages saying that requests to vote “were received” providing the shareholders (and certain global custodians) the impression that their votes were submitted when in fact, they were defective and would not be counted at the registrar. It was only by mapping the custodian chain that Okapi uncovered these defective registrations and votes. This work enabled Okapi to cure votes ahead of the meeting and ensure the NewGAMe nominees were successfully elected to the board.
Final Result
NewGAMe SA nominees were elected to the board of GAM.
