23/06/2010 Author: Elana Margulies

Man Group puts seeding plans on hold

Man Group, the FTSE-listed hedge fund manager, has placed its seeding activities on hold as the $40bn investment firm concentrates on more liquid strategies.

According to a Man investor, RMF Global Emerging Managers (GEM), the company’s seeding vehicle, which was slated to invest $250m in new and emerging funds in 2009, is now fully invested and has no current plans to raise new capital for seeding deals.

Sources close to Man confirmed that the business was currently observing a hiatus, as the firm concentrated on more liquid products with shorter lock-up periods, but stressed that the company would return to seeding when the time was right.   

Man launched RMF GEM in 2007 as a seeding vehicle that incorporated a revenue-sharing scheme, paying investors a fixed proportion of their gross revenues. The business aimed to complete between three and five seeding deals each year.

Speaking at the time, Hans Hurschler, head of Hedge Fund Ventures at Man said, “RMF offers an innovative financing technique for new hedge funds to stimulate their growth. It is a true alignment of interest. RMF is profiting from the growth of the start-ups and the owners have a higher incentive to build their business on performance.”

Hedge fund seeding has suffered over the past three years, with a number of businesses leaving the sector. However, 2009 saw a gradual return to deal making with surviving players, including RMF, rejoining the space.  

Last year, RMF GEM is believed to have completed three deals, including a $50m investment to Connecticut-based 5:15 Capital Management’s flagship fund, a global fixed-income arbitrage strategy. In July, it seeded Hong Kong’s Minerva Macro Fund, the Asia-focused fund managed by Stanley Ku, founder of the Fortress Investment Group’s Hong Kong office.

Commenting on the deal, Hurschler said: “Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well-respected money manager in Asia. But we are also enthusiastic about investing in this fund early in its development because Minerva invests in the kind of highly liquid assets that are especially appealing to investors, following last year’s problems with gating and side pockets.”

Last week, it was widely reported that Minerva Capital Management was returning money to investors following a run of poor performance. A spokesperson for Man told HFMWeek that, despite having no plans for further seed deals, it “would be business as usual”, for the funds seeded over the past three years.  

In May, Man Group entered into a $1.6bn aquisition deal with NYSE-listed manager GLG Partners, creating a liquid trading strategies business for the
manager.