Man Group, a UK-based hedge fund manager, has signed an agreement to buy fund of hedge fund portfolio from Merrill Lynch Alternative Investments.
Under the agreement, Man Group will acquire the investment management contracts to manage Merrill’s portfolio of multi-strategy and strategy-focused fund of hedge funds with total AuM of $1.2bn.
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Subject to approvals and consents, the transaction is expected to close in the second quarter of 2015.
Man Group has selected its fund of hedge fund arm, FRM, to manage the portfolio. The deal will add Merrill Lynch’s 17 multi manager hedge fund and managed futures fund of funds to FRM.
The acquisition will expand Man Group’s presence in the US as well as broaden its portfolio of US registered investment companies and fund of hedge fund products.
Upon completion of the deal, Man Group plans to offer the funds to other investors globally as well as Merrill Lynch’s and US Trust’s wealth management clients.
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By GlobalDataAs per the terms of the agreement, Man Group will pay $2.9m upfront for the portfolio in addition to 35% of net management fees generated annually by the portfolio, payable for five years.
The total payments under the earn-outs cannot exceed $30m, Man Group said.
Michelle McCloskey, senior managing director of FRM, said: "We are excited that Merrill Lynch has selected FRM as the steward of its world-class portfolio of multi-strategy and strategy-focused funds, supported by a proven distribution platform.
"We look forward to continuing to deliver high quality products and services to Merrill Lynch’s clients, while expanding the investor base globally as investors increasingly seek exposure to alternative investments through managers like Man Group," he added.
