Man Group completes FRM acquisition

published 17 July 2012

Man Group has completed its acquisition of FRM Holdings, a global hedge fund research and investment specialist.

The deal, which is costing Man up to $142.8m, means the two firms' combined multi-manager business now has total funds under management of around $19bn, making it the largest independent non-US based "fund of hedge funds".

The UK hedge fund group will pay a maximum of $82.8m in cash, net of total net assets it acquires and dependent on asset retention, and it will also pay out a 47.5% share of performance fees attributable to FRM's existing funds under management over three years, up to $60.8m.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

"By combining the complementary investor bases of the two businesses and pairing FRM's well regarded investment process with Man's managed accounts infrastructure, we can increase revenues with no material change to Man's current cost base," said Man's Chief Executive Peter Clarke in April, when the deal was first announced.

"The transaction has been structured so that the consideration adjusts in line with asset retention, to ensure an attractive return for our shareholders."

The company said that the deal would achieve cost savings of $45m a year from operational synergies in the combined group, which in turn would generate double digit growth to Man's adjusted management fee earnings per share in 2013. The internal rate of return from the acquisition is expected to be well in excess of Man's cost of capital.

Man's share price rose 0.73% to 68.60p by 14:18.

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.