Cash back as Glebe shut down

Investors in Glebe Asset Management (GAM) will have their funds paid out to them after the ethical investment manager, which put itself up for sale last October, failed to find a suitable buyer.

Chief executive Rodney Dredge said the sale was unsuccessful largely because GAM is an “old fashioned” multi-class institutional manager, for which it was difficult to find a buyer who could provide a comparable investment style in all classes with an ethical overlay.

“So you could argue that it was mission impossible right from the start,” he said.

“But we [tried to sell] for the benefit of our retail unit holders.”

But because a buyer could not be found, Dredge said the only thing that could be done in the best interests of all 2,400 unit holders was to close each fund progressively over a three-month period.

Closure of the funds, which hold around $568 million, began last Tuesday when holding company Glebe Administration Board shut down eight funds — its wholesale small caps funds, and all of its retail funds.

GAM offered a wide range of ethical investment products, including an Australian equities fund, a balanced fund and an international equities fund.

Dredge conceded there would be capital gains tax implications for investors receiving money.

“There will be, but they won’t be huge. One of the benefits of what we’re doing is the way we’re closing the funds down so you get franking credits, and get that balancing effect.

“Our calculations also show that these funds churn sufficiently to keep the capital gains tax relatively low.”

Last October, GAM’s owner, the Anglican Church of Australia, said the planned sale was part of a program of restructuring its investment operations to more closely reflect the needs of its Sydney diocese.

A spokesperson for PricewaterhouseCoopers, which advised GAM on the sale process, said compliance costs brought on by increasing regulation in the funds management industry also contributed to the decision to sell.

“One area of the new financial services landscape which has had an impact on smaller manufacturers has been the introduction of Financial Services Reform and the accompanying increase in compliance costs, particularly when offering retail schemes,” the spokesperson said.