Liontrust Outflows Continue To Mount As AUMA Sinks Below £30bn

AUMA fell 12% over the first half of the financial year, down from £31.4bn to £27.7bn, a figure which has since fallen further to £26.6bn as at 9 November 2023.

CEO John Ions noted the majority of the manager's assets were invested in UK equities, an asset class that has long fallen out of favour with investors, to explain the hefty decline, while chair Alastair Barbour added there were inevitable "bumps, twists and turns" in a company's growth.

Failed GAM bid 'will lead to restructuring' as Liontrust outflows mount

"No company enjoys linear growth over many years," he said. "While Liontrust has been going through a less comfortable part of the journey after delivering many years of rapid growth, the group has a robust strategy and a clear plan for how management intends to deliver it."

The asset manager experienced outflows across every arm of its business, with UK retail funds and MPS suffering the heaviest investor redemptions at £1.8bn.

Alternative funds saw £748m withdrawn, while institutional, international funds and accounts, and investment trusts lost £524m, £148m and £33m to redemptions, respectively.

Despite this, Liontrust enjoyed £6m of performance fee revenue, up from nil in the same period last year, while adjusted profit before tax dropped to £36m, down 16% from £42.9m.

The firm also suffered a statutory loss before tax of £10.1m, compared with a profit of £14.1m in the same period last year, as charges related to acquisitions increased 60% to £46.2m.

Questions raised over 'management credibility' as Liontrust fails to buy GAM

Liontrust's half year report also noted that while a proportion of the projected costs related to the failed GAM acquisition were negotiated on a contingent basis, there is an exceptional charge of "not more than £11m", of which £8m was incurred in this period, with roughly £2m incurred in the previous.

It is expected further costs will drag into the second half of this financial year, relating primarily to corporate finance, target operating model design, class 1 circular and Swiss offer documents, and legal.

Chair Barbour asserted the board was "pleased" with Liontrust's attempted acquisition of GAM, including its "resolute" commitment to the price offered. He said the failed bid was a "better outcome than completing a deal for the wrong price".

Liontrust has declared a dividend of 22p per share, which will be payable on 5 January 2024.

Neptune Investment Management

As part of Liontrust's acquisition of Neptune IM in 2019, a share purchase agreement provided a potential payment of 661,813 Liontrust shares, if the AUA managed by the acquired team exceeded £4bn on the third anniversary of the completion date.

This could be extended if the MSCI World index suffered a fall of 10% or greater in the 12 months prior to this anniversary, a clause that was met.

However, despite this, the team remained below the AUMA threshold, and the share award, worth £4m at 1 October's share price, was not payable.

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