The share price of Man Group (LSE: EMG) — the world’s largest publicly traded hedge-fund manager — is up over 5%, on release of news that it has entered into a conditional agreement to acquire Numeric Holdings LLC, a privately-owned quantitative equity manager, based in Boston, that currently had $14.7bn of funds under management as of 31 May 2014.
Man Group will be paying $219m in cash, with a potential $275 million of further consideration payable to a range of Numeric Holding’s management team and employees on the fifth anniversary of the deal, subject to profitability run rate criteria.
The company will certainly welcome the new client money that the acquisition of Numeric Holdings will bring, given the huge outflow from its own AHL funds over the past few years. In the first half of 2013 alone, Man Group’s assets under management fell by nearly 9% to $52bn, although they have recovered a bit since, standing at $55bn as of 31 March this year.
Commenting on the purchase of Numeric Holdings, Man Group CEO Manny Roman said:
“We are delighted to announce the acquisition of Numeric, which has an excellent track record of performance and innovation in quantitative investing. 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. Man’s strategy is to provide the optimal infrastructure and environment for its investment divisions, enabling entrepreneurial asset management focused on delivering attractive risk-adjusted performance for clients. Numeric is well positioned to benefit significantly from our scale and resources.”
At 104.2p, Man Group’s share price is up over 22% so far this year, trouncing the FTSE 100‘s mere 1.3% rise in that time.
