ONCE its acquisition of GLG is complete, Man Group will become the biggest hedge fund manager in the world – again. It lost the title after being caught up in Bernie Madoff’s massive ponzi scheme, an error that saw its hedge fund assets tumble from $31.1bn in September 2008 to $14.6bn at the end of this March. This time round, the moniker is pricey: the $1.6bn price-tag is about 24 times consensus earnings forecasts for 2010.
While this deal isn’t cheap, it has significant long-term upside. The merged entity, with a combined $63bn of assets under management, will be better able to weather the double blow of regulatory onslaught and market volatility.
One of the ironies of the European Alternative Investment Fund Manager (AIFM) directive is that it disproportionately hurts smaller firms; despite all the misguided talk of banks that are “too big to fail”, the EU is actually passing legislation that encourages hedge funds to bulk up.