industry consolidation and valuation

While there is little information on HFA, I found the following piece of information on Man's aquisition of GLD interesting - and may serve as a gauge on how much HFA is worth.

Man returns underscore rationale behind GLG move
By Sam Jones and John O'Doherty

Published: May 28 2010 03:00 | Last updated: May 28 2010 03:00

Mixed returns and heavy redemptions from clients at Man Group underscored plans to acquire rival GLG Partners, management at the FTSE 100 listed hedge fund said in its full-year results released yesterday.

Pre-tax profits at Man, one of the world's largest hedge fund managers, were down 27 per cent to $541m (372m) on revenue that dropped 46 per cent to $1.35bn for the year to March 31.

The company's full-year figures come hard on the heels of its "transformative" bid, announced last week, for GLG , the New York-listed hedge fund that manages more than $24bn of assets.

Man hopes the $1.6bn takeover of GLG will diversify its business and end its reliance on the company's successful, but volatile, flagship fund AHL, its principal source of revenue.

AHL, which alone manages $21bn of Man's asset base, had a difficult 2009, causing investors aiming to capitalise on the market recovery to avoid the company. Funds under management at Man have fallen nearly 16 per cent during the 12-month period to the end of March and have remained flat since, the results showed.

Current funds under management stand at $39bn, down from $46.8bn in March 2009 and a peak of $68bn in September 2007.

Institutional investors, typically the most prized, have redeemed $8.6bn from Man funds over the past year. This was offset by just $1.6bn in sales. Net inflows from private investors of $2bn were offset by currency movements and losses as a result of fund underperformance.

In the 12-month period to the end of March, Man's AHL fund fell in value by 7.7 per cent.

Earnings per share dropped 13 per cent from 28.4 cents to 24.8 cents. The total dividend is 44 cents following a final of 24.8 cents.

The shares closed up 10.7 per cent, or 23p, at 238.3p.

AHL has recorded a positive performance so far this year, however, and there are signs that institutional investors are again beginning to reallocate funds to Man.

Acquiring GLG would bolster the company's ability to sell product to investors regardless of the market environment, the company said.

In addition, the next few weeks would see total assets under management grow by the inclusion of $1.5bn in new mandates. The Universities Superannuation Scheme, the UK's second-largest pension fund, was revealed to be investing up to $1bn with Man earlier this year.

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