14th Oct 2016 09:53
LONDON (Alliance News) - Shares in FTSE 250-listed hedge fund manager Man Group PLC jumped Friday after it reported fund inflows over the third quarter, as well as plans for a share buyback and an acquisition to launch a private markets business.
Man Group said it intends to launch a repurchase programme for up to USD100.0 million in shares, to return surplus capital to shareholders over the next 12 months.
That came as it reported ttotal funds under management increased by 6% in the quarter to the end of September to USD80.7 billion from USD76.4 billion at the end of June. The company said it received net inflows in the quarter of USD1.3 billion and positive investment movement of USD2.5 billion.
Shares in Man Group were up 13% at 123.00 pence Friday, the best performer in the FTSE 250 by a distance.
The largest inflows came into Man Group's quant long-only strategies, run by the AHL and Numeric operations, which received USD1.0 billion in inflows. Quant long-only funds under management increased to USD21.4 billion from USD19.0 billion over the period, boosted by USD1.4 billion in positive investment movements.
The quant alternative strategies, run by the same arm, saw net inflows of USD700 million in the quarter. However performance was negative resulting in a USD500 million reduction in funds. Quant alternative funds under management stood at USD19.4 billion at September 30, up from USD19.0 billion at June 30.
There were also inflows to the fund of funds operation, FRM, which received USD400 million inflows. Investment performance over the period was flat, but investment exposure adjustments caused a USD500 million positive movement. FRM's funds under management stood at USD12.7 billion at September 30, up from USD11.8 billion at June 30.
However, Man Group's discretionary funds business GLG saw outflows in the period, of USD600 million from alternative strategies and USD200 million from long-only strategies. Investment movement was positive in both areas, with a USD300 million boost in alternative funds and USD1.3 billion rise in long-only funds.
GLG funds under management in its alternative strategies fell to USD14.6 billion from USD14.9 billion in the period. FuM in GLG's long-only strategies rose to USD12.0 billion from USD11.1 billion.
"There was good investment performance across both alternative and long only strategies at GLG and Numeric, offsetting negative performance among some of AHL's strategies this quarter, as the market proved more difficult for trend following strategies. The net inflows were driven largely by the appetite of institutional clients for our quant alternative and quant long only strategies," said Luke Elllis, Man's chief executive officer.
Man Group also said said Friday it has agreed to acquire Aalto Invest Holding AG for USD25.0 million. The UK-based company, which has offices in the US and Switzerland, will to become a central component of Man Global Private Markets, a new private markets offering for longer-term investments. The acquisition is expected to complete in January 2017.
Man Group said two-thirds of the consideration will be settled in cash at completion, with one-third to be settled in shares. Earn-outs could add another USD207 million to the acquisition price, with payments on the first, fourth, sixth and sixth anniversaries of completion. Man Group said the payments will be on a sliding scale calculated as 3.6 times the increase in run rate management fee profit, before tax at the time of payment.
Man Group said it expects the acquisition to be accretive to earnings per share from 2017 onwards, and the total regulatory capital usage to be approximately USD75 million.
Aalto had USD1.7 billion of funds under management at September 30, and its co-founders, Mikko Syrjanen and Petteri Barman, will become co-heads of the Real Assets division of Man Global Private Markets.
Aalto manages strategies which invest in real estate equity, which constitutes approximately USD0.7 billion of Aalto's funds under management, with a focus on single family rental homes in the US, and real estate debt, which constitutes approximately USD0.9 billion of Aalto's funds under management.
By Adam Clark; [email protected]
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