MAN Group, the UK’s largest listed hedge fund, almost tripled its spare cash pile yesterday after the City watchdog gave the green light on plans to slash the number of dollars it has to stow away as a safety buffer.
The agreement will increase Man’s spare capital up to $920m (£598m), from $370m, starting in 2014 after the newly formed Financial Conduct Authority signed off on plans to let Man change its regulatory status.
It means Man no longer has to hold capital buffers – set at $300m – required by the FCA. A further $250m of capital requirements have also evaporated due to Man’s change of regulatory status to a limited licence group, recognising its move away from certain business activities, like fund seeding.
The lifting of the requirements raised speculation the group could put the money to work with either an acquisition or special dividend for investors.
The announcement sent Man’s shares spiking in early trading up as much as 8.7 per cent. They finished the day 6.8 per cent higher at 104.36p.
Man, which started life as commodity trading house, had a difficult last year after poor performance from its flagship quantitative fund AHL, which accounts for most of the group’s revenues.
However, a change of leadership in February saw new chief executive Manny Roman installed to lead the group, with fellow leading light Luke Ellis stepping in as president.
Analysts yesterday said the spare cash would give Man more strategic flexibility and boost the attractiveness of buying another company, as an acquisition would cut the amount of capital needed to back it.