Man Group pares Gains as BlackRock Bid Talk Fades

Date: Thursday, February 18, 2010
Author: Hedge World

Man Group shares pared gains but were still Wednesday's top FTSE 100 riser after a source close to BlackRock said the U.S. fund firm had no interest in buying the hedge fund firm.

Shares in Man, the world's largest listed hedge fund firm, which has been the subject of several unsubstantiated bid rumors in recent years, closed 5.2% up at 239.1 pence, having earlier risen as high as 245.7 pence.

A person close to BlackRock said on Wednesday [Feb. 17] the firm had no interest in acquiring Man.

Earlier, the Daily Mail's market column said the U.S.-based firm was looking for another large deal, despite it still digesting the $13.5 billion acquisition of Barclays' fund business, BGI, last year.

Both Man Group and BlackRock declined to comment.

"BlackRock spec (speculation)—loads of rubbish," said one trader who declined to be named.

The Daily Mail said the U.S. firm was missing the kind of hedge fund business that Man could provide.

"It's not beyond the bounds of possibility, it's just not that likely," said one analyst who asked not to be named. "In the past when Man's share price was beaten up people have talked about it being taken out, normally by an investment bank. It makes a change that it's an asset manager."

Man shares have fallen 22% this year due to client outflows and poor returns from its flagship family of funds AHL. This has left the firm on a forward price/earnings ratio of 13.3 times, below the sector average of 18.1 times, and a prospective dividend yield of around 12%.

The FTSE 100 closed up 0.6% on Wednesday.

Man Group said in a regulatory filing on Tuesday that BlackRock had increased its holding above 10% last Friday [Feb. 12], but this is largely on behalf of BlackRock clients.

AHL, a set of computer-driven funds that follow trends in global futures markets, saw its Diversified Futures fund rise 0.15 percent last week, the first positive weekly performance in a month, which traders said was supporting Man Group's shares.

The funds, which had $20.4 billion in assets as of March 2009, are still down 16.6% over the past year.

By Laurence Fletcher and Matthew Goldstein