Man acquires Numeric in latest deal

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People Moves
19 Jun, 2014

Man Group has acquired Numeric Holdings, a Boston-based quantitative equity manager with $14.7 billion in Assets under Management (AuM), just weeks after it purchased Pine Grove, a $1 billion credit-focused fund of hedge funds.

Man Group will pay $219 million following the deal’s completion, and an additional $275 million on the fifth anniversary of the deal under an option arrangement . This sum will be conditional on the profitability of the newly merged business.  Rumours had been circulating about an imminent deal for some time now.

The deal, which is subject to shareholder approval, will enable Man Group to reduce its reliance on AHL, its $12.5 billion managed futures fund, which like many other trend-following funds, has suffered from underperformance and investor outflows. A number of trend following managers have struggled to make sense of the markets as Central Banks continue to pump capital into the financial system thereby reducing volatility while interest rates continue to be at near zero levels.  However, AHL has reported profits this calendar year. Manny Roman, CEO at Man Group, said the deal would help diversify its quantitative fund management business.

The deal will also enable Man Group to bolster its footprint in North America, a point made by Roman, and reduce its reliance on investors from Europe and Asia.

Man Group has made a number of high-profile acquisitions over the years. Its most recent high-profile deal was the takeover of FRM, an $8 billion fund of hedge funds, back in 2012. Man Group paid $82.8 million for FRM although this was contingent on FRM retaining assets.

Man Group has suffered redemptions over the last few years and presently manages $55 billion, a far cry from its $71 billion peak when it acquired GLG in 2010. In 2012, Roman succeeded Peter Clarke as chief executive officer at Man Group. This followed a tumultuous year, which saw widespread redemptions, a halving of the company’s share price and relegation from the FTSE 100. There was even speculation by analysts at UBS in 2012 that Man Group was a ripe target for a take-over with Blackrock and Franklin Templeton being identified in the report as potential bidders. Since Roman’s ascent, Man Group has been aggressively cost-cutting and making senior management changes.

Fitch Ratings recently predicted there would be an onslaught of small, selective M&A (merger & acquisition) deals at European asset managers as these firms seek to diversify their product lines and expand their distribution capabilities. 

Tags: 
Man GroupNumericFRMM&AquantitativeUBSBlackRockFranklin Templeton

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