Man Group doubles in size with Swiss RMF acquisition

  • 24 May 2002
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Man Group has become the world's largest hedge fund manager with the $833m acquisition of RMF, the Swiss fund of funds manager.

The acquisition nearly doubles Man Group's assets under management, from $10.7bn to $19.2bn, and will provide diversification and stability to Man's revenue base.

RMF will give Man Group, which has a strong private client base, an additional focus on institutional clients. In addition, RMF generates the bulk of its revenues through management fees as opposed to performance fees, which are more predictable and stable.

Before the acquisition, shareholders had been critical of Man for depending too much on performance fees, which can be highly volatile in hedge fund management.

The acquisition will give Man Group a new distribution channel for its funds. A banker close to the company said that the fund manager is successful at cross-fertilisation with new acquisitions. Man Group is expecting RMF to win new mandates outside of its traditional European franchise.

Man financed the acquisition with a combination of $250m in cash, the issue of 23.3m of new shares to the vendors, and $260m in new equity. Merrill Lynch, which advised Man on the acquisition, launched the equity placing yesterday (Thursday) morning, before the markets opened. The deal comprised 20.3m shares priced at £9, a 5% discount to Wednesday's close. CSFB was joint broker to Man Group.

The share price opened down yesterday morning, because of the placement, but recovered to close yesterday at £9.60. Man Group's share price has slipped by 20% in 2002, but Man Group's management will be hoping that the acquisition revives investors' enthusiasm with the stock. Against a backdrop of declining stock markets, Man Group's share price has doubled since November 2000.

Man Group expects the acquisition to make a neutral impact on earnings per share in 2003, and that it will be earnings enhancing in the following year. This expectation, however, excludes any revenue synergies which may be found.

  • 24 May 2002

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