Hedger to buy Lehman exposure
Source: Agencies |
July 19, 2011, Tuesday
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Print Edition
Print Edition
HEDGE fund firm Man Group is to buy exposure to the estates of defunct US bank Lehman Brothers from funds run by its GLG unit for US$355 million, in an effort to clean up the funds' holdings and make them easier to sell to new investors.
GLG - bought by Man Group last year for US$1.6 billion - was using Lehman as its prime broker at the time of the US bank's collapse at the nadir of the credit crisis in 2008, and yesterday's move means Man will benefit or bear the risk of any change in the value of the claims.
The cash deal mainly affects GLG's European Long Short fund, run by star manager Pierre Lagrange, and its North American fund, which will share upside in "limited circumstances" in return for transferring the risk.
"These transactions will remove the remaining uncertainty from funds with residual claims against the Lehman estates, to the benefit of both existing and new investors," Man Group Chief Executive Peter Clarke said.
The deal, which was approved by directors of the funds instead of the investors themselves, raises the question of whether investors would have benefited more from holding on to the claims.
"We ... assume that Man would not be taking on the risk if it did not expect to gain or at least come out even," Oriel Securities analysts said.
Man Group declined to give details on how far the GLG funds had written down the value of their Lehman claims.
GLG - bought by Man Group last year for US$1.6 billion - was using Lehman as its prime broker at the time of the US bank's collapse at the nadir of the credit crisis in 2008, and yesterday's move means Man will benefit or bear the risk of any change in the value of the claims.
The cash deal mainly affects GLG's European Long Short fund, run by star manager Pierre Lagrange, and its North American fund, which will share upside in "limited circumstances" in return for transferring the risk.
"These transactions will remove the remaining uncertainty from funds with residual claims against the Lehman estates, to the benefit of both existing and new investors," Man Group Chief Executive Peter Clarke said.
The deal, which was approved by directors of the funds instead of the investors themselves, raises the question of whether investors would have benefited more from holding on to the claims.
"We ... assume that Man would not be taking on the risk if it did not expect to gain or at least come out even," Oriel Securities analysts said.
Man Group declined to give details on how far the GLG funds had written down the value of their Lehman claims.
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