Man, the world’s largest listed hedge fund, rose five per cent in trading after unveiling the acquisition, which will see Numeric integrated into the quantitative side of the firm that also houses flagship fund AHL.
The deal is the first major acquisition for Man since 2012’s purchase of fund of fund manager FRM.
Last week it struck a deal to acquire smaller fund of hedge fund firm Pine Grove in the US, part of a strategy to bolster the distribution of its funds in the lucrative US market.
Man Group will pay $219m in cash up front, and up to $275m more within five years depending on the success of the acquisition.
Numeric is a Boston-based quantitative trading fund housing $14.7bn of assets managed mainly for US pension funds and high net worth individuals. It is currently owned by private equity group TA Associates, which will sell its holding to Man.
“The transaction provides us with the opportunity to advance two of our core strategic objectives: first, to build a diversified quantitative fund management business with significant assets in fundamentally based quantitative strategies and second, to develop further our presence in the US market,” Roman said.
Numeric made revenues of $89.3m last year, led by strong performance fees of $50.9m. Man, which started life as a trading company providing rum to the Royal Navy, has suffered from a long run decline in its share price recently but Roman has been applauded for leading a turnaround.
The cash for the deal will come from a $550m pile generated when Man switched its regulatory rating meaning it had to hold less capital.
BEHIND THE DEAL
CREDIT SUISSE | SEBASTIAN GRIGG
1 Grigg is one of the best known figures in the City, and this is the first transaction by Credit Suisse for Man Group in many years.
2 Grigg is vice-chairman of the bank’s European, Middle East and Africa investment banking department, having been named for the role in 2013.
3 His wife is noted former Times journalist Rachel Kelly, who has just published a best selling memoir called Black Rainbow.
Also advising on the deal from Credit Suisse was Charles Donald, co-head of UK investment banking. Hamish Summerfield from the bank was also on the deal. Man also used PL Advisors as a financial adviser and RLM Finsbury as UK PR adviser and Prosek Partners for PR in the US.