Man Group to spin off brokerage arm on NYSE
Kennedy, MarketWatch
Last Update: 8:04 AM ET Mar 30, 2007
LONDON (MarketWatch) -- U.K. hedge fund manager Man Group said Friday it plans to spin off its brokerage arm through an initial public offering on the New York Stock Exchange as it also announced pretax profit for the year will meet expectations.
The long-rumored separation will allow both the brokerage and hedge fund units to maximize their growth through independent strategies and their own capital structures, the company said.
The world's largest publicly-traded hedge fund manager said the IPO is scheduled for the third quarter of 2007, subject to market conditions remaining favorable.
Shares in Man Group (UK:EMG: news, chart, profile) slipped 1.9% in London, having gained as much as 2.8% in early trading. Also see London Markets.
Nic Clarke, an analyst at Charles Stanley & Co., said the spinoff was "well signposted," and that the in-line performance for the year was not enough to sustain momentum in a stock that has risen around 15% since mid-March.
The firm said the brokerage division, currently known as Man Financial, will be renamed MF Global and will be led by Kevin Davis, currently managing director of the brokerage unit.
The net proceeds from the offering will be returned to shareholders later in the year, Man Group added.
"Separation will allow each business to focus even more effectively on their separate growth strategies and take advantage of the significant business development opportunities in each of their industries," said Chief Executive Peter Clarke. See more markets coverage.
"We believe that an IPO of MF Global will create significant value for Man Group shareholders," he added.
Charles Stanley's Clarke said the division could be worth around $4.5 billion, adding that Man Group likely chose to list in New York as that's where the majority of its brokerage division operates.
In late 2005 Man Group paid $323 million to buy the brokerage division of Refco when the derivatives trading group was pushed into bankruptcy after allegations its CEO had hidden hundreds of millions of dollar of debt. |
