Man Group is expanding its quantitative investment platform with the acquisition of the $1.47 billion Boston-based quantitative equity manager Numeric Holdings.
Man will pay $219 million—from its existing cash resources—upon completion of the transaction while Numeric management will retain an interest in the firm which Man will be able to acquire at the end of the fifth year following completion through a put and call option structure. Man said it could pay up to an additional $275 million for management's stake although the agreement depends upon the run-rate profitability of the business.
The Numeric acquisition will create a global quantitative investment platform, including AHL/MSS, with over $25 billion of funds under management and a broad product range across alternative and long only, trend following, technical and fundamentally based quantitative strategies.
Based on annualized returns, over 95% of Numeric’s current strategies have historically outperformed their selected benchmark over one, three and five years years and all Numeric long-only strategies covered by eVestment rank in the top quartile of their respective peer groups over the same periods.
Said Man Group CEO Manny Roman, in a statement:
“We are delighted to announce the acquisition of Numeric, which has an excellent track record of performance and innovation in quantitative investing. The transaction provides us with the opportunity to advance two of our core strategic objectives: first, to build a diversified quantitative fund management business with significant assets in fundamentally based quantitative strategies and second, to develop further our presence in the US market. Man’s strategy is to provide the optimal infrastructure and environment for its investment divisions, enabling entrepreneurial asset management focused on delivering attractive risk-adjusted performance for clients. Numeric is well positioned to benefit significantly from our scale and resources.”
Completion is subject to certain conditions, including the approval of Man Group’s shareholders, and is currently expected in September 2014.
Man Group is expected to have pro forma surplus capital of approximately $250 million after the acquisition, taking into account the $115 million share repurchase program announced earlier this year.
Said Mike Even, Numeric CEO, in a statement:
“Man stood out to us as a perfect strategic partner and today’s announcement signifies the full support of Numeric’s management team. Our key criteria from the outset was to find a new partner with a strong cultural fit who would preserve complete independence of our investment process and provide strategic support. We are excited and energized by this transaction and look forward to serving our clients with the support of Man.”