Tue, Jul 29, 2014
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. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  3. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  4. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  5. Opalesque Roundtable: European family offices struggle to retain their investments in offshore hedge funds[more]

    Komfie Manalo, Opalesque Asia: The European Union’s Alternative Investment Fund Managers Directive (AIFMD) will constrain investment opportunities amidst concern a number of U.S. fund managers will stop marketing their products in the European Union under the new rule, said Valentin Bohländer fro