British hedge fund firm Man Group has bought U.S. peer Numeric Holdings, backed by TA Holdings, for an initial $219 million to broaden its computer-driven business and increase its presence in the United States.
Privately-owned Numeric – which has $14.7 billion of assets under management, mostly owned by institutional investors – was put up for sale last year by private equity firm TA Associates, and Man confirmed last month it was in talks to buy the company.
The acquisition comes days after Man said it was buying another U.S.-based firm, Pine Grove Asset Management, which has about $1 billion in assets.
Man Chief Executive Manny Roman said the Numeric deal meant his company could further two of its main objectives – diversifying its so-called quantitative fund business and expanding its presence in the United States, the world’s biggest hedge fund market.
Quantitative trading strategies use computer-based algorithms to determine when to buy and sell an asset.
Man Group’s shares had risen 5.4 percent by 0918 GMT, making them the second-biggest gainer on Britain’s FTSE mid-cap index, which was up 0.9.
Numeric’s managers will keep an 18.3 percent stake in the business, but Man Group will have the right to buy them out five years after completion of the deal under an arrangement capped at a further $275 million.
Based on the forecast profitability of the group, Man is expecting the total cost of the deal to reach about $325 million.
“We believe that the acquisition consideration based upon these multiples is very fair to Man Group shareholders, and that the acquisition structure adequately aligns Numeric’s management interests with Man Group shareholders,” said RBC Capital Markets analyst Peter Lenardos.
Analysts also said the acquisition helped the company broaden its quantitative fund offering, currently reliant on its flagship computer-driven fund AHL.
The deal will need approval from Man Group shareholders and completion is expected in September.
As of the end of March, Man managed $55 billion.
(Reporting by Chris Vellacott and Huw Jones; Editing by David Holmes and Pravin Char)