Man Group has sold back to management its 25% stake in hedge fund BlueCrest Capital Management for $633 million, giving Man a pre-tax profit of about $250 million, according to an announcement by Man.
Man acquired the minority interest in 2003 for £105 million ($172 million). Since then, assets under management at BlueCrest have grown to $25 billion from $3.1 billion. BlueCrest is now the third largest hedge fund in Europe, while Man is the largest listed hedge fund globally.
For the year ending March 31, BlueCrest is expected to contribute about $66 million in management and performance fee income. In the year-earlier period, BlueCrest had contributed $73 million in fee income, according to the announcement.
“The sale of our minority interest in BlueCrest is part of our strategic focus on Man's internal investment management capabilities,” Peter Clarke, CEO of Man, said in the announcement. “We have had a long and successful relationship with BlueCrest, and this transaction crystallizes a significant profit for shareholders on our original investment.”
The transaction also “generates substantial cash and regulatory capital resources, further enhances our strong financial position and allows us to continue developing our core investment business,” Mr. Clarke said. Man has $68 billion in assets under management. The sale will increase Man's regulatory capital surplus to about $800 million from $300 million reported as of Dec. 31.
In a separate announcement, Michael Platt, BlueCrest co-founder, said the company also repurchased the outstanding partnership interest from retired co-founder Bill Reeves. Information on the size of that stake was not disclosed.
“As a result of these transactions, all of the partnership interests in BlueCrest are now owned by the working partners of the firm,” according to Mr. Platt.