GAM Investments has ceded full control of its jointly managed catastrophe bond hedge fund to Fermat Capital Management, resolving a months-long dispute that had unsettled investors and significantly reduced the fund’s assets, according to a report by CityWire.

In a joint statement issued on 6 May, the two firms confirmed that Fermat will take over as sole investment manager of the GAM FCM Cat Bond Fund, a British Virgin Islands-domiciled vehicle that had been co-managed by both groups. The announcement marks an “orderly and managed transition,” with GAM set to fully exit its involvement with the fund.

“Following completion, GAM will have no ongoing involvement with the BVI fund and Fermat will communicate with investors,” the statement read. GAM also extended its thanks to the fund’s board and investors for their support.

The fund had been at the centre of a behind-the-scenes battle over governance, with tensions escalating over the composition of the fund’s board. According to CityWire sources, Fermat had grown frustrated by the inaccessibility of a GAM-appointed board member during key decision-making periods. The boutique manager had proposed replacing the board member with two independent candidates – a move reportedly backed by over 60% of investors – but the resolution failed to pass. GAM instead installed new board members, a move that drew sharp criticism from limited partners.

The governance standoff has had significant repercussions: the BVI fund’s assets have shrunk from around $2.4bn to just $200m, according to a person familiar with the matter.

The announcement comes days ahead of Fermat’s expected removal from management of the $2.5bn GAM Star Cat Bond UCITS fund, which is being transferred to Swiss Re’s asset management arm. Fermat has expressed dissatisfaction with that decision, claiming it had not been notified in advance of the change.