Man Buys Merrill Funds Of Funds

Dec 8 2014 | 12:59pm ET

The Man Group has acquired Merrill Lynch Alternative Investments’ funds of hedge funds, agreeing to pay as much as $33 million for them.

With the deal, expected to close in the second quarter, Man adds 17 funds and $1.2 billion to its own fund of funds arm, FRM.

The acquisition is the latest move in Man’s acquisition-heavy growth strategy and a further foray in the U.S., where it had pledged to expand. Man said the Merrill Funds would broaden its lineup of U.S.-registered retail funds, which it plans to begin offering to clients globally, in addition to the funds’ current investor base, made up of Merrill Lynch and US Trust wealth-management clients.

The acquisition follows those earlier this year of quantitative hedge fund Numeric Investors and another U.S. fund of funds business, Pine Grove Asset Management.

“We are excited that Merrill Lynch has selected FRM as the steward of its world-class portfolio of multi-strategy and strategy-focused funds, supported by a proven distribution platform,” FRM senior managing director Michelle McCloskey said. “We look forward to continuing to deliver high-quality products and services to Merrill Lynch’s clients, while expanding the investor base globally as investors increasingly seek exposure to alternative investments through managers like Man Group.”

Man will pay just $2.9 million upfront for the funds of funds. Bank of America Merrill Lynch will also be entitled to 35% of the funds’ net management fees over the next five years, up to $30 million.

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