LONDON (HedgeWorld.com)–Man Group plc* entered into an agreement to acquire 25% of BlueCrest Capital Management from its principals for ?105 million (US $178.5 million) in cash and shares.
The deal involves 4,959,210 new ordinary shares based on Man’s Nov. 24 closing price and cash of ?33.3 million. Merrill Lynch advised Man, and Goldman Sachs International advised BlueCrest in this transaction.
London-based BlueCrest, founded by Mike Platt, is owned by its management. The firm runs US$3.1 billion in fixed-income and currency strategies and has a staff of about 50. The core fund, BlueCrest Capital International Ltd., is a fixed-income arbitrage vehicle with US$2.4 billion and a compound annual return of approximately 16% since inception.
“BlueCrest will help us to accelerate our growth of asset management capacity whilst diversifying our product range,” commented Man Chief Executive Stanley Fink, in a statement. “It is exciting to find a manager like BlueCrest, which has critical mass as well as the potential to grow much further and this investment represents a significant opportunity for the two organizations to work together.”
The group will receive preferential access to available capacity from BlueCrest. Man has been an investor in the fixed-income fund since inception, through its Swiss-based fund of funds RMF. In recent years, Man acquired two major funds of funds businesses, RMF and Chicago-based Glenwood .
It is estimated that for its 25% stake, Man would have been entitled to BlueCrest profits of ?7.6 million, including ?5.7 million in management fee income, in the 12 months to Nov. 30, 2003, on the basis of past performance. But given growth in BlueCrest assets and current earnings, Man expects management fees for the coming year to be considerably higher.
* Man Group plc is a minority investor in HedgeWorld.