Gottex Fund Management has agreed to buy its struggling Swiss peer, Arpad Busson's EIM.
Gottex will pay just 31.5 million Swiss francs (US$36 million) in the all-share deal, giving EIM investors a roughly 30% stake in the combined company. The newly-enlarged Gottex said it expects its fee-earning assets to near US$10 billion by the midle of next year.
"To be in the very exclusive club of about US$10 billion, shows scale and strength," Busson told Bloomberg News, putting a brave face on matters. Busson has been seeking a buyer for EIM since early last year; the firm's assets have fallen from US$14 billion to US$3 billion over the past six years, as investors increasingly shy away from funds of funds.
Under the deal, which requires regulatory approval, Busson will become chairman of Gottex. EIM's Eric Bissonnier will be named co-chief investment officer and the firm's Hywel Evans corporate counsel. Gottex CEO Joachim Gottschalk will remain at the firm's helm.
"Consolidation is the name of the game for everybody in the industry," Gottschalk told Bloomberg. "The cost base for regulation and in general is not on the way down. It is on the way up."
The merger may save Gottex as much as US$12 million in the first half. Some of those savings are likely to come from layoffs, which Gottschalk admitted were coming. The transaction is set to close within three or four months.