Peter Clarke Opalesque Industry Update – London-based hedge fund operator Man Group Plc., generated approximately $700m in net inflows during the first quarter of the year, reflecting the firm’s first positive quarterly inflow since 2008. In a statement released by the company on Tuesday, the firm credited the acquisition of GLG with stopping the exodus of clients and at the same time “counterbalancing a negative period for AHL.”
The positive performance was also driven by the firm’s recovery after the initial shock of the Japanese earthquake and tsunami which saw markets fall sharply.
At the same time, Man also committed to pursue diversification following the sale of its stake in BlueCrest and the purchase of the remaining 50% of Ore Hill.
A separate press release by the hedge fund firm said it had completed a definitive agreement to take 100% ownership of Ore Hill Partners LLC and Ore Hill Partners Capital Management LLC, a New York-based hedge fund which manages a series of hedge funds with $800m in funds under management (FuM). Ore Hill manages a $1.1bn structured product.
The acquisition of Ore Hill cements Man’s diversification focus and is expected to further boost the firm’s earnings this year. Man bought a 50% stake in Ore Hill in 2008. It added that the complete ownership of Ore Hill “is in line with its strategic focus on internal investment management capabilities, and continues the build out of single strategies on the GLG platform.”
Media reports indicated that Man Group’s deal with GLG reduced its dependence on BlueCrest, specifically on its managed-futures business. Last week, Man Group sold its 25.5% stake in BlueCrest for $633m which earned Man an estimated $250m after buying the firm at $383m in 2003.
Peter Clarke, Chief Executive of Man, commented, “In the course of our 2011 financial year, we have fundamentally reshaped our business and delivered positive performance across a comprehensive range of liquid alternative investment styles. We have made excellent progress with the integration of GLG, sold our stake in BlueCrest to focus our resources on in-house capabilities, secured a major mandate win for our re-focused Multi-Manager business and returned to positive flows.”
Clarke added that the markets started the year on a good note with positive outlook for growth and recovery. However, the earthquake in Japan this March decreased risk appetite and increased volatility in markets.
“Recent market events may affect private investor demand in the short term. However, the work we have done this year to expand the range of investment styles and solutions we offer our investors, coupled with strong performance, broad distribution and a sound financial base, continue to position us well to meet investor demand globally in the coming quarters,” the CEO added.
The group reported a slight increase in FuM at $69bn as at end Mar-11 from $68.6bn posted as at end Dec-10. The figure was up 75% compared to the $39.4bn recorded a year ago.
Pre-tax profit was placed at $280m compared to last year’s $541m or down by 52%.