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Man hires banks for broker IPO

Date: Sunday, February 4, 2007
Author: Iain Dey, Sunday Telegraph, www.telegraph.co.uk

Man Group, the world's largest hedge fund manager, is understood to have lined up five banks, including Merrill Lynch and Citigroup, to handle a Wall Street listing of Man Financial, its US-based brokerage business.

Despite claiming last week that it had yet to make a decision on whether to proceed with an initial public offering of the business, Man Group, the London-listed parent company, has been running a beauty parade of Wall Street's biggest investment banks for several weeks.

If the listing were to go ahead it would be one of the biggest flotations in American history. Man Financial is expected to achieve a valuation of between $5bn (2.5bn) and $7bn. At the higher end of the range, it would rank as one of the biggest listings in Wall Street's history.

SEC regulations make it difficult for the group to confirm whether or not it will proceed with a transaction until the sponsor banks have been formally appointed. An announcement on the spin-off is expected within days.

Man Financial is a broker which handles futures, options and other financial derivatives for institutions and private clients. It also acts as an intermediary in the currency, metals and energy markets.

The group bought some of the assets of Refco, the US broker that collapsed last year.

The business posted a 49 per cent gain in net income last year, contributing about 13 per cent of Man Group's profits.

Speculation has been mounting about a possible flotation of the business since June last year, when the group recruited Amy Butte, the former chief financial officer of the New York Stock Exchange.

One perceived glitch to the possible flotation has been a legal dispute related to the collapse of Philadelphia Alternative Asset Management, a Cayman Islands registered hedge fund. Receivers to the fund sued Man Financial last year for allegedly conspiring to hide the fund's losses. Man has denied the charges and said that it does not believe the matter would have a material financial impact.

A listing would allow Man Group to concentrate on its investment management business, which manages more than $60bn, mainly in hedge fund assets.

In response to speculation on a possible flotation of Man Financial last week, the group said that it "regularly reviews its structure in keeping with its objective of maximising returns to shareholders". The group added that "if and when any decision is made to demerge the businesses, a formal regulatory announcement will be made."