MAN GROUP LTD
NEW YORK and LONDON, 17 December 2014 -- Man Group plc ("Man Group") announced today that it has entered into a conditional agreement to acquire Silvermine Capital Management LLC ("Silvermine" or the "Company"), a Connecticut-based leveraged loan manager with $3.8 billion of funds under management across nine active collateralised loan obligation ("CLO") structures as of 30 November 2014 (the "Acquisition"). The Acquisition is expected to complete in the first quarter of 2015, subject to certain approvals being obtained.
Silvermine is wholly-owned by the firm's founders and senior staff members and is based in Stamford, Connecticut. The team of 17 focuses exclusively on managing US levered credit portfolios and, since inception in 2005, has executed 16 separate transactions totalling $6.7 billion.
Upon completion of the Acquisition, Silvermine will be integrated into Man GLG and will operate under the Man GLG Silvermine name which will complement Man GLG's existing credit business. Silvermine's team will remain in place under the leadership of two of the firm's founders, G. Steven Kalin and Richard F. Kurth, who will continue to work alongside the other co-founders Aaron Meyer and Jonathan Marks.
The Acquisition follows Man Group's recent acquisitions in the US of Pine Grove Asset Management LLC, Numeric Holdings LLC and the Merrill Lynch Alternative Investments LLC fund of hedge fund portfolio1. The strategic rationale for the Acquisition includes:
Integration of Silvermine's specialised and high calibre team into Man Group, with
long-term experience and expertise in US levered credit;
Significant enhancement of Man Group's existing US credit business and global CLO
footprint, providing the necessary scale to become a significant player in the US CLO
market;
Further expansion of Man Group's footprint in the US, utilising Silvermine's distinct distribution channel through investment banks, and adding to the firm's investment capabilities; and
Opportunity for the new Man GLG Silvermine business to leverage Man Group's
infrastructure, banking relationships, distribution capabilities, and balance sheet.
The consideration paid by Man Group is structured to align its interests with Silvermine and comprises:
An upfront payment of $23.5 million, paid in cash from existing resources upon completion of the transaction;
Two earn out payments, payable following the first and fifth anniversary of closing, on a sliding scale dependent on levels of run rate management fees at the time:
o After one year, up to $16.5 million; and
o After five years, up to $30 million.
The earn out payments are expected to be paid in cash, also funded from Man
Group's resources at the time; however Man Group has retained the right to, at its
1Man Group's acquisition of Merrill Lynch Alternative Investments LLC fund of hedge fund portfolio is subject to certain approvals and consents
discretion, issue ordinary shares at the then prevailing market price in order to satisfy some or all of the consideration payable.
The regulatory capital requirement associated with the Acquisition is expected to be approximately $45 million. As of 30 November 2014, Silvermine's run rate management fee revenues and PBT were $17 million and $8 million respectively, based on $3.8 billion in funds under management.
Mark Jones, co-CEO of Man GLG, stated, "The acquisition of Silvermine will transform our existing credit business and position us to benefit from strong demand for US CLOs and other credit strategies. Silvermine is a highly respected, specialised business with an excellent track record of outperformance. As part of Man Group, Silvermine will benefit from our world class infrastructure, distribution and access to capital and we are confident that this acquisition will bring meaningful advantages to our investors by further diversifying our offering."
Steven Kalin and Richard Kurth, Managing Directors of Silvermine, commented, "We're excited about the opportunities that joining Man Group will bring to us and to our investors. We have always been focused on identifying opportunities in the credit space that, given their risk/return proposition, deliver attractive performance for our clients. We are pleased to be joining forces with an organisation that not only embraces our firm's entrepreneurial spirit, but plans to help foster that spirit and collaborate with us to further grow the business".
Berkshire Capital Securities LLC is acting as financial adviser to Silvermine.
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)
James Bradley/Michael Turner
+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 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's funds under management were $72.3 billion. The original business was founded in 1783. Today, Man Group is listed on the London Stock Exchange and is a constituent of the FTSE
250 Index with a market capitalisation of around £2.6 billion. Man Group also supports many
awards, charities and initiatives around the world, including sponsorship of the Man Booker literary prizes. Further information can be found at www.man.com.
Man GLG, a wholly owned subsidiary of Man Group (since 14 October 2010), is a global asset management company offering its clients a wide range of performance-oriented investment products and managed account services. Founded in 1995, Man GLG is dedicated to achieving consistent, attractive investment returns through traditional, alternative and hybrid investment strategies. Man GLG currently manages $32.2 billion2.
Man GLG has been investing in credit and convertible strategies for over 15 years. Steve Roth heads the Man GLG Global Credit team which is an established business, with $7 billion of funds under management3. The absolute return strategy incorporates a diverse range of approaches and asset classes including relative value, distressed debt, event driven capital structure arbitrage and convertible bond arbitrage strategies. The long-only credit strategies include investing in corporate bonds, convertible bonds and asset-backed securities with a range of approaches applied to each.
Founded in 2005, Silvermine is a SEC registered investment advisor with, as of 30
November 2014, approximately $3.8 billion in assets under management focused on high yield credit. The founding team has worked together for over 10 years using primarily senior
secured loans as the basis to express their views through a variety of credit products. Since
inception, the Company has executed 16 separate transactions totalling $6.7 billion. At 31
December 2013, Silvermine had gross balance sheet assets of $24.5 million and profit before tax attributable to these assets of $11.6 million4.
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.
2 As at 30 September 2014
3 As at 30 September 2014
4 Source: Silvermine unaudited accounts for the year 31 December 2013.
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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