Man Group will acquire real assets manager Aalto Invest Holding and use it to form a core part of the firm's new private markets offering.
The deal will see Man Group acquire the entire issued share capital of the $1.7 billion money manager, which specializes in real estate equity and debt strategies, said a news release Friday. It is wholly owned by its founders, Mikko Syrjanen and Petteri Barman, and current and former senior staff members.
The management team at Aalto will continue under the founders' leadership, and there will be no change to the investment process. Aalto has 33 staff members, is headquartered in London and has offices in the U.S. and Switzerland. Man Group said the transaction will also help the firm to further expand its U.S. presence through Aalto's U.S.-based investment team and strategies.
The deal will involve a $25 million payment by Man Group at completion, which will be settled two-thirds in cash, and the remainder in new Man Group ordinary shares. Man Group will make an earn¬out payment of up to $27 million following the first anniversary of deal completion, on a sliding scale dependent on levels of run-rate management fees at the time. Three further earn-out payments will be made following the fourth, sixth and eighth anniversaries, totaling up to $180 million. Earn-out payments are capped at $207 million, the release said.
The acquisition is subject to regulatory approvals and other conditions, and is expected to be completed in January.
Man Group, which has $80.7 billion of assets under management, also announced the launch of Man Group Private Markets, for which Aalto will form the real assets platform. Messrs. Syrjanen and Barman will become co-heads of real assets within the unit, will join Man Group's executive committee and will report to Jonathan Sorrell, president of Man Group.
A spokeswoman confirmed that Man GPM will be an additional investment manager for the firm, alongside the four existing managers: Man AHL, Man GLG, Man FRM and Man Numeric.
The unit will develop strategies across private markets, including real estate, credit and infrastructure.
"In line with our strategy to continue to diversify the firm and our offering for clients, this private markets capability is complementary to our broad offering in liquid strategies," said Luke Ellis, CEO of Man Group, in the release.
Also Friday Man Group released its trading update for the quarter ended Sept. 30. Assets under management increased 5.6% to $80.7 billion, and increased 5.1% over the year ended Sept. 30.
Net inflows for the three months ended Sept. 30 were $1.3 billion, with inflows to quant alternative, fund-of-funds alternative and quant long-only strategies. For the quarter ended June 30, net inflow totaled $500 million, and for the three months ended Sept. 30, 2015, net inflows were $1.4 billion.