MAN GROUP LTD
NEW YORK and LONDON, 8th December 2014 -- Man Group plc ("Man Group") announced today that it has entered into a conditional agreement with Merrill Lynch Alternative Investments LLC ("Merrill Lynch") to acquire the investment management contracts to manage a portfolio of multi-strategy and strategy-focused fund of hedge funds ("Portfolio") (the "Acquisition") with total AUM of $1.2 billion. The Acquisition is expected to complete in the second quarter of 2015, subject to certain approvals and consents, including approval of the board of managers and investors of a US registered investment company.
Man Group's fund of hedge fund arm, FRM, has been selected to manage the Portfolio following a due diligence process which assessed its investment expertise, quality of personnel, investment process and ability to service clients. Following the completion of the Acquisition, Man Group intends to offer the funds to other investors globally as well as Merrill Lynch's and US Trust's wealth m anagement clients.
The Acquisition of the Portfolio follows Man Group's recent Acquisition of Pine Grove Asset
Management LLC. The strategic rationale for the Acquisition includes:
Continued participation in the consolidation of the fund of hedge fund industry;
Further expansion of Man Group's footprint in the US;
Increased commitment to the US wealth management channel;
Synergistic partnership allowing Man Group and Merrill Lynch to deliver high quality investment solutions for clients;
Broadened portfolio of US registered investment companies and complementary fund of hedge fund products; and
Expansion of FRM's existing co-mingled fund platform and managed accounts.
The assets, which will be acquired, are spread across 17 multi manager hedge fund and managed futures fund of funds. One fund is registered as an investment company with the US Securities and Exchange Commission, while the others are private. All of the funds would complement Man Group's and FRM's existing product offering, with 3 multi-strategy funds and 14 strategy-focused funds. This would include emerging markets, equity long / short, global macro, relative value, managed futures and other credit-focused products.
The consideration will be paid to Merrill Lynch in cash from existing resources, and comprises:
An upfront payment of $2.9 million, paid upon completion of the transaction;
35% of the net management fees generated annually by the Portfolio, payable annually for five years;
The total payments under the earn-outs cannot exceed $30.0 million.
As at 31st October 2014, the Portfolio generated run rate net management fees of $6.2 million. The transaction is structured as an asset purchase and, as such, no additional costs are expected to be incurred, nor synergies generated. The regulatory capital requirement associated with the Acquisition is expected to be approximately $10.0 million.
Michelle McCloskey, Senior Managing Director of FRM, stated, "We are excited that Merrill Lynch has selected FRM as the steward of its world-class portfolio of multi-strategy and strategy-focused funds, supported by a proven distribution platform. We look forward to continuing to deliver high quality products and services to Merrill Lynch's clients, while expanding the investor base globally as investors increasingly seek exposure to alternative investments through managers like Man Group."
Fiona Smart
Head of Investor Relations
+44 20 7144 2030 fiona.smart@man.com
Rosanna Konarzewski
Global Head of Communications
+44 20 7144 2078 media@man.com
Finsbury (UK enquiries)
Michael Turner/Chris Ryall
+44 207 251 3801
ManGroupUK@Finsbury.com
Prosek Partners (US enquiries)
Brian Schaffer/Caroline Harris-Gibson
+1 212 279 3115 bschaffer@prosek.com/cgibson@prosek.com
Man Group is a leading alternative investment management business with a diverse offering in hedge funds and long only products across equity, credit, managed futures, convertibles, emerging markets, global macro and multi-manager solutions. At 30 September 2014, Man Group managed $72.3 billion. The original business was founded in 1783. Today, Man Group is listed on the London Stock Exchange and is a member of the FTSE 250 Index with a market capitalisation of around £2.7 billion. Man also supports many awards, charities and initiatives around the world, including sponsoring the Man Booker literary prizes. Further information can be found at www.man.com
.About Man FRM
Founded in 1991 and joining Man Group in 2012, Man FRM is one of the largest independent
European based alternatives specialists, with $11.7 billion of assets under management as at
30 September 2014. With a predominantly institutional client base, Man FRM is responsible for open- architecture hedge fund and alpha strategy solutions, including fund of hedge funds, client advisory solutions, outsourced research, and consulting. It runs the largest and most extensive buy-side managed account platform in the world, with 66 research and investment staff in offices located in London, New York, Tokyo, Guernsey and Switzerland.
This document contains forward-looking statements with respect to the financial condition, results and business of Man Group plc. By their nature, forward looking statements involve risk and uncertainty and there may be subsequent variations to estimates. Man Group plc's actual future results may differ materially from the results expressed or implied in these forward-looking statements.
The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
Nothing in this announcement should be construed as or is intended to be a solicitation for or an offer
to provide investment advisory services.
Nothing in this announcement is intended to be a profit forecast or a profit estimate for any period or a forecast of future profits and statements relating to earnings accretion or enhancement should not be interpreted to mean that earnings per Man ordinary share for the current or future financial periods will necessarily match or exceed its historical published earnings per share.
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