A series of recent acquisitions by Emmanuel “Manny” Roman, CEO of Man Group, and his management team has led to the firm's doubling its assets under management in the past five years, plus a chance to finally plant a flag on U.S. soil.
Man is riding high on the back of recent institutional wins — a $1.2 billion institutional hire for its quantitative unit, AHL Partners LLP; a more than $1 billion hire by a U.S.-based state pension fund for hedge funds-of-funds unit FRM, and $380 million of funds-of-funds hires by U.K. local authorities.
A strategic decision to change the company's focus has led to assets from institutional clients accounting for 73% of the total $78.8 billion under management, up from 32% of $34.9 billion in 2010.
The turn came in part with Man's acquisition of GLG Partners, which was “very much an institutional business,” in 2010, said Mr. Roman, speaking in an interview at his London office. Mr. Roman, who had been co-CEO at GLG, became chief operating officer at Man, and in February 2013 became CEO.
“When GLG was acquired by Man Group, there was a clear shift in strategy, under new leadership, in terms of what we wanted to achieve and what we wanted to do. We wanted the company to service institutional clients and be very much focused on that market,” he said.
The change of tack suits Mr. Roman, who acknowledged institutions' staying power.
“I am impressed with U.S. pension funds that didn't really blink when markets crashed in 2008 — they stuck to their strategies and have recovered well.” The opportunity to build relationships and work strategically with institutions “is very powerful,” he said.
The switch in focus and work by Mr. Roman and his team is winning over other observers.
“We recently upgraded Man Group to outperform (from sector perform), and one reason is that the business is becoming more diversified and institutional,” said Peter K. Lenardos, London-based analyst at RBC Capital Markets. “Institutional business, while lower margin, is also more stable with greater longevity.”
The firm is in “much better shape since (Mr. Roman) took over,” with a restructuring of the balance sheet, “dramatically lower” cost base, and diversification of the business, Mr. Lenardos said.
One investment consultant, who spoke on the condition of anonymity, acknowledged that Man Group is a different business now, “in terms of ... (their) services and offerings, and the way they run themselves.”
The institutional focus has resonated well with asset allocators and pension funds, the consultant said. “Institutional clients are looking less to appoint a manager, but more for a partnership — they want to ensure (the manager is) there for the long run, and has their best interests in mind. It is about understanding what institutional investors want. They want to pick up the phone and feel that the manager is there” for them.
When it comes to Man Group, the consultant said approval is “coming from building (a) more institutional asset base, a business less-focused on one core area (and) having abilities outside one particular niche.”