March 25, 2010 11:29 pm

Man sounds out US hedge funds

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Man Group, the London-based hedge fund, has approached several of the US’s largest hedge fund managers with an eye to expanding its operations in the country.

Peter Clarke, chief executive of the FTSE-listed company, which has $40bn under management, has begun making regular trips to the US to sound out hedge funds for possible distribution agreements or takeovers.

Acquisitions or tie-ups in the industry are almost unheard of but many industry insiders believe that consolidation is long overdue following the big redemptions and underperformance of 2008 and early 2009.

Among those Mr Clarke has met are SAC Capital Advisors and Millennium Partners, two of the US’s most prominent hedge funds with assets under management of $12bn and $8bn respectively.

No agreements between Man, SAC or Millennium have been struck. Mr Clarke is understood to have approached both funds on an informal basis. Spokespeople for SAC and Millennium declined to comment. A person familiar with Millennium said the firm has no plans for a deal with Man.

Mr Clarke is nevertheless understood to be keen to move quickly.

Man has suffered recently after several months of poor performance for its flagship fund, AHL, which manages $21.1bn – more than half the company’s total assets.

People with knowledge of the situation say AHL’s deterioration – down 16.9 per cent in 2009 – has spurred Man’s board in its efforts to diversify the business.

The company is understood to be particularly interested in acquiring an equity long/short hedge fund.

In an analysts’ call after the company announced its pre-close trading update this week, Mr Clarke said the business had an equity-related strategy “gap” in the range of funds it distributed and internally managed.

“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,” Mr Clarke said. “That’s something that we can access through others but over time would like to have some internal capabilities to deliver.”

Interest in expansion has not been limited to the US, however. Bankers have suggested that another likely target for the company would be the UK’s Gartmore, the recently listed fund manager part owned by Hellman & Friedman with about £22bn ($33bn) in assets and a high-profile hedge fund business led by Roger Guy.

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