Man Group buys Lehman estate claims

HEDGE fund giant Man Group yesterday paid $355m (£220m) to take over all residual exposure to Lehman Brothers from funds acquired when it bought GLG last year.

Man will take over unresolved legal claims on the estate of the failed US investment bank dating from when Lehman was prime broker to a number of GLG funds including the $2.8bn GLG Euro Long Short fund.

Chief executive Peter Clarke said the decision would enable Man to attract more investment to the affected funds.

“These transactions will remove the remaining uncertainty from funds with residual claims against the Lehman estates, to the benefit of both existing and new investors,” he said.

Man paid the cash to transfer over the exposure to the Lehman estates at its current net asset value. As a result, its net cash position fell to $545m from $900m and its regulatory capital surplus was cut by $50m to $850m.

While it could lose value if it is awarded nothing from Lehmans’ bankruptcy proceedings, it will receive any proceeds from successful claims and the deal is expected to be neutral over three years.

Analysts said the move should improve Man’s fund inflows.

“This will make it easier to sell the European long short fund going forward,” said Singer Capital analyst Sarah Ing.