When Man Group boss Manny Roman sat atop Goldman Sachs’ prime brokerage unit in 2004 he must have picked up some tips on fund managers’ diversification strategies. Fast forward a decade and it’s clear from yesterday’s takeover of Numeric that the classic don’t-put-all-your-eggs-in-one-basket mentality of hedgies has rubbed off on the former Goldman man.
Most M&A deals talk up the potential cost synergies between the two parties, especially in the back-office heavy functions of asset managers. But not this one. Yesterday showed Roman invests with the true acumen of a hedge fund manager, rather than a traditional executive suit.
Roman was handed a $550m pot of cash earlier this year, generated by a clever regulatory switch which lessened the amount of capital Man needed to hold – a pot he is now investing in US fund managers. This deal has two clear rationales for Man: diversification and expansion.
Numeric has performed fantastically over the past 18 months. Assets have risen from $7.6bn to $14.7bn. All of its funds are in the top quartile of performing hedge funds. The deal will take the pressure off Man’s other quantitative strategy, the much-maligned AHL. The takeover will give the group a stronger foothold in the lucrative US market. Investors over the pond, large US public pension funds, are more attuned to alternative investments than their European counterparts.
Manny has gone long Numeric – and shorted traditional dealmaking.