UK hedge fund manager Man Group acquires Numeric Holdings

UK hedge fund manager Man Group has acquired Boston-based quantitative equity manager, Numeric Holdings, which has $14.7 billion in assets under management. The move comes only weeks after its purchase of Pine Grove, a $1-billion credit-focused fund of hedge funds.

Man Group will pay $219 million following the completion of the deal, and another $275 million on the fifth anniversary of the deal under an option arrangement, subject to the profitability of the newly merged business.

Rumours had been circulating about an imminent deal for a while now.

The deal, which is subject to shareholder approval, would allow Man Group to cut its reliance on AHL, its $12.5-billion managed futures fund, which like many other trend-following funds, had taken a hit from underperformance and investor outflows.

Several trend following managers had struggled to make sense of the markets as central banks continued pumping capital into the financial system, reducing volatility even as interest rates continued to be at near zero levels.

AHL had reported profits this calendar year. According to Man Group CEO Manny Roman the deal would help diversify its quantitative fund management business.

The deal would also allow Man Group to expand its footprint in North America, according to  Roman, and reduce its reliance on investors from Europe and Asia.

The London-based group has about $55 billion in assets under management and a workforce of about 1,000 worldwide.

Numeric Holdings, founded in 1989, had over $14.7 billion in assets under management as of 31 May and 74 employees. It focused on long-only equity investments and is part owned by the private equity firm TA Associates.

The deal would boost the Man Group's geographic base of institutional investors and accomplish a stated goal of expanding in the US market, said Roman.

The deal, is expected to be completed in September.

Michael Even, president and chief executive, of Numeric Holdings and Robert Furdak and Shanta Puchtler, the firm's co-chief investment officers, would continue managing the business after the acquisition, and would lso join Man Group's executive committee.