Fri, Sep 30, 2016
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. Studies - Hedge funds’ study reveals vast disparity in types of investors securing side letter arrangements, Cambridge: Look to private investments for best access to LatAm growth[more]

    Hedge funds’ study reveals vast disparity in types of investors securing side letter arrangements A new study of the hedge fund space by industry law firm Seward & Kissel LLP reveals a wealth of information regarding established hedge fund managers’ use of side letters—special agreements

  2. Activist News - Caesars 'optimistic' on deal with hedge fund creditors[more]

    From Reuters.com: Caesars Entertainment Corp said on Monday it remains "optimistic" of reaching a $5 billion deal with the bulk of its creditors to push its main operating unit out of bankruptcy, but one hedge fund bondholder said it will pursue litigation. Caesars offered a sweetened $5 billion set

  3. Hedge funds recover from losses as central banks give markets a respite[more]

    Komfie Manalo, Opalesque Asia: The Lyxor Hedge Fund index was up 0.4% from the week ending September 20 (-2.4% YTD), supported by the willingness of central banks to remain accommodative, Lyxor Asset Management said in its weekly briefing. It ad

  4. Perry Capital closing flagship fund after almost three decades[more]

    From Blooomberg.com: Richard Perry, one of the biggest names in hedge funds, is calling it quits after 28 years. Perry, 61, is winding down his New York-based flagship fund as the industry confronts one of the most tumultuous periods in its history. In a letter to investors Monday, he said his style

  5. Eden Rock buys Gottex stake in ERG Asset Management[more]

    Matthias Knab, Opalesque: Eden Rock Group announced the purchase of Gottex’s stake in ERG Asset Management and so the firm is now wholly owned by Eden Rock. The two firms established the joint venture in 2011 to focus on providing cost effective solutions to funds holding illiquid investments, as