Thu, Feb 22, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Fitch places Man Group on watch negative on GLG acquisition announcement

Wednesday, May 19, 2010
Opalesque Industry Update – Fitch Ratings has placed Man Group plc's (Man) Long-term Issuer Default Rating (IDR) of 'BBB+' on Rating Watch Negative (RWN) following the announcement of its proposed acquisition of GLG Partners Inc (GLG).

The RWN reflects execution risks from the integration of GLG into Man, retention of key GLG staff and funds under management (FUM) and the incorporation of the two companies' distinct cultures. The RWN also reflects the negative effect the acquisition would have on Man's leverage and capital. Fitch will resolve the RWN following further examination of the impact of the transaction and an assessment of Man's success in integrating GLG's operations and culture. Man's Long-term IDR is not expected to fall below investment grade.

Man's current ratings are based on a substantial cash and capital surplus above its regulatory capital requirement. Man's outstanding debt is fairly significant at around USD1.4bn. The absolute level of financing provided to Man's own funds has fallen on an absolute level but in the past has expanded and contracted with its FUM. Fitch does not expect a material increase in debt from this transaction. Nevertheless, the net debt/EBITDA ratio could be more volatile with the addition of GLG.

The proposed transaction values GLG at USD1.6bn with Man planning to pay a substantial portion in cash. Fitch notes that this is equivalent to a fairly high 6.75% of GLG's FUM at 31 March 2010. Fitch expects Man's capital surplus, tangible equity and solid net cash position would be depleted by GLG's acquisition to an only adequate level.

Fitch understands that GLG's investment managers intend to remain at GLG after the acquisition but notes that the integration of different cultures and pay structures can be challenging and some loss of staff and FUM could occur. Fitch notes that the acquisition of GLG could reinforce Man's strong franchise in alternative investment management in the medium term through the diversification of its client base, geographic reach and investment products, and its improved scale.

At 31 March 2010, Man had funds under management (FUM) of USD39.1bn and GLG FUM of USD23.7bn. The acquisition is subject to regulatory and shareholder approvals.

Man is a leading provider of alternative investment products to private and institutional clients and is listed on the London Stock Exchange.

GLG is an alternative investment manager listed on the New York Stock Exchange.

Fitch has placed the following ratings on Rating Watch Negative:
Man Group Plc
Long-term IDR 'BBB+'
Subordinated Debt 'BBB'
Hybrid Debt 'BBB-'

www.fitchratings.com


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Art & Motion launches collectible car alternative investment vehicle[more]

    Komfie Manalo, Opalesque Asia: Luxembourg-based Art & Motion has launched a new investment vehicle dedicated to vintage cars and exceptional high-quality vehicles as this collectible market has grown exponentially the turn of the centu

  2. Opalesque Exclusive: Global Sigma captures February's long-vol trade[more]

    Bailey McCann, Opalesque New York for New Managers: Florida-based Global Sigma rode February's volatility to new highs. The firm's AGSF strategy is up +2.8 percent through February 16 and +4.2 percent YTD a

  3. Institutional Investors - Hedge funds regain their appeal for a $57 billion asset manager, Private credit strategies in stratosphere[more]

    Hedge funds regain their appeal for a $57 billion asset manager From Bloomberg.com: With volatility back on the radar, one of the Nordic region's biggest asset managers is considering relying a bit more on hedge funds to help oversee his portfolio. Mikko Mursula, the chief investment off

  4. Investing - All aboard for hedge funds as trade tide lifts shipping, Hedge funds pile into Time Warner in bet on merger success[more]

    All aboard for hedge funds as trade tide lifts shipping From Reuters.com: Forced to abandon ship after mistiming their investments five years ago, hedge funds are venturing back in a bid to profit from growing global trade flows. Around 90 percent of traded goods by volume are tran

  5. Investing - Hedge funds turn short on tech just as stock rally takes off, After biggest short, speculators slash bearish US bond bets as supply deluge looms[more]

    Hedge funds turn short on tech just as stock rally takes off From Newsmax.com: A key group of investors has just missed out on the biggest tech-stock rally since 2014. Hedge funds and other large speculators turned net short on Nasdaq 100 Index futures for the first time in 21 months, ac