A little over a month ago, news got out that UK-based Man Group was looking for a long/short equity fund.They were looking at SAC Capital and Millennium Partners back then and it became clear that after Man Group’s 2009 performance was poor (down 16.9%), they were thinking diversification might help them improve.
“I’ve said before that that’s a gap that we would like the time to fill out in terms of having equity long/short capabilities within the firm,” said Peter Clarke, the chief executive of the $40 billion quant-focused Man Group.
Well instead of SAC or Millennium, Man decided to go with a significantly smaller different multistrat fund, GLG Partners, estimated to be worth $1.6 billion with ~23.7 billion AUM (Millennium has ~12 billion and SAC Capital ~14 billion AUM), according to BBC.
The GLG purchase is a step down from their former ambitions and it caused Man’s shares to plummet 8.8% (although it’s pretty normal for a merger to hurt the firm that does the buying) because the market apparently believed that Man over-valued GLG Partners at $1.6 billion, 55% higher than GLG’s price at Friday’s close.
Man estimated that their joint business would be grow to worth $63 billion, which knocks JPMorgan Asset Management off of the top spot as #1 biggest hedge fund in the world.