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Digital Subscriptions > The Hedge Fund Journal > Issue 116 - September 2016 > Made In Cambridge

Made In Cambridge

GAM acquires Cantab and launches GAM Systematic

Hamlin Lovell: What distinguishes Cantab from some other systematic investment managers that GAM might have partnered with?

Ewan Kirk: We now have nearly a ten-year track record and have performed well against our peers. The Quantitative programme (running c $2.7bn) has annualised at 8.1% since March 2007, and the Core Macro programme (running c $1.7bn) has annualised at 7.9% since January 2013. We had exceptionally good years in 2008 and 2014. We found 2013 difficult and underperformed by a considerable amount, but learned things and changed things as a result.

Core Macro is in the vanguard of the low-cost products. Some people jumped on the low cost bandwagon with less sophisticated products, whereas Core Macro runs on the same infrastructure as the Quantitative programme, using sophisticated models and risk management tools, and has performed exceptionally well over the past 3.5 years.

We have always said that one of the advantages of our quantitative programme is that it is not a strict trend-following CTA – it is something different. The firm has stuck to its scientific-based approach to investment, technology, and risk management, and has built a platform that enables people to do new and innovative things.

THE DEAL STRUCTURE

HL: Before agreeing to the acquisition by GAM, did Cantab talk to other potential acquirers and explore other types of deal structure?

EK: Part of running a firm is to think about strategic direction, and our CEO Adam Glinsman [formerly COO and Partner of Lansdowne Partners] does that very well. We thought about structures to enhance the stability, growth and longer term future of the firm in a number of different ways. We received a number of offers from acquirers with different structures.

HL: Which professional advisers assisted you?

EK: Barclays on the investment banking side and Schulte Roth & Zabel International LLP as lawyers. [The London office of Schulte Roth & Zabel International LLP (SRZ) represented Cantab Capital Partners LLP. The SRZ team was led by Jim McNally, investment management and M&A partner, and Christopher Hilditch, co-head of SRZ’s London office and investment management partner. The team also included tax partner Nick Fagge, regulatory & compliance partner Anna Maleva-Otto and associate Anthony Lombardi.]

HL: Was GAM the highest bidder, or the best fit on a range of criteria, or both?

EK: It was not a question of the highest bidder, and anyway, not all offers were completely contemporaneous. The primary driver for the transaction was not the economics of the deal per se – GAM was the best fit. We were convinced of a complementary fit between GAM and us in terms of brand, global reach, and sales force. We don’t have 80 salespeople and offices around the world as they do. They didn’t have a scalable systematic business so it was a very good fit for them too. It was also a good match culturally.

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