Hedge fund GLG looks to seed UK-listed oil producer

Date: Tuesday, July 28, 2009
Author: Joseph A. Giannone, Reuters

GLG Partners (GLG.N), among the world's largest hedge-fund managers, is launching an oil production company that will be listed on the London Stock Exchange this fall, people familiar with the plans said on Monday.

GLG, based in London but listing its own stock in New York, intends to seed a venture called Lothian, that will be floated on the London Stock Exchange in September and then acquire oil production assets worldwide. Lothian would begin with a market value of about $500 million, said the sources, who were not authorized to speak for attribution because the venture is still in the planning phases.

Some investors have been briefed on Lothian. Merrill Lynch, a unit of Bank of America (BAC.N) and JP Morgan Cazenove, part of JPMorgan Chase & Co (JPM.N) are advising GLG.

Launching an operating company like Lothian represents a departure for GLG, which manages $18 billion in hedge funds and more traditional long-only investments. Like most money managers, GLG typically purchases small stakes in public companies.

By comparison, banks like Goldman Sachs and Morgan Stanley have pursued investments in energy, natural resources and financial services by acquiring all or most of operating companies.

GLG is scrambling to recover from last year, when assets under management fell by more than half and many clients fled.

To lead the new venture, GLG is putting together a management team including industry veterans like Tom Hickey, former finance director of Tullow Oil (TLW.L), and John Kennedy, chairman of oil services group Wellstream Holdings (WSML.L), according to the Internet edition of British newspaper the Telegraph.