Man aquires FRM
Man Group, the $59 billion asset management firm, is to acquire Financial Risk Management (FRM), the $9 billion funds of funds.
The deal, which is still subject to regulatory approval, would give the combined entity $19 billion in Assets under Management (AuM) making it the largest independent, non-US funds of funds. Man will not pay anything immediately although it will pay $82.8 billion over three years dependent on whether FRM retains assets.
The new business will be led by Luke Ellis, chief executive of Man Multi-Manager and previously managing director at FRM. Blaine Tomlinson, FRM founder, will become non-executive chairman of the combined company.
In a statement, Man said the latest acquisition would create additional resources and scale which has the potential to attract assets and deliver strong returns to investors.
Man has not had a great year so far. The firm’s share price has halved while its computer driven fund AHL has delivered poor returns. This latest acquisition by Man, which comes two years after it purchased GLG, appears to be an attempt to become less reliant on the underperforming AHL.
The deal will also save Man up to $45 million per year in operational costs at a time when cost-cutting has been prevalent at the firm. In September 2011, it was revealed Man intended to cut one in five employees (or 400 staff) during the first quarter of 2012.
Written by Owen Dickinson