Fink Predicts More Hedge Funds Will Go Public

by Carla Johnson, Investors Offshore.com

10 June 2005

As many as 50 hedge fund firms will seek a listing within the next decade as their owners look to cash in on the industry, according to Stanley Fink, chief executive of Man Group, the world's biggest hedge fund.

"The processes of age and greed... mean more hedge funds will look at listing as a way to crystallise capital value. The desire to make money and build something of lasting value will encourage them to either sell to the institutions or to list," Fink told a conference in Switzerland this week.

However, Fink warned those "40 to 50" hedge funds who meet the listing criteria that the extra financial rewards will also bring new responsibilities.

"They'll need to be transparent and to show that the business doesn't depend on a couple of key people. The market will also need to understand and believe that hedge funds are here to stay and not a bubble," he stated.

Since Man Group became the first hedge fund manager to list its stock in London ten years ago, RAB Capital has been the only other hedge fund to sell its shares publicly. Since listing last year, RAB's stock has more than doubled in value and its assets have been boosted to more than $1.5 billion.

Fink also pointed out that taking a company public confers extra duties in terms of regulation and cost, and that hedge fund companies will need to be earning at least £5 million ($9.2 million) annually to be able to afford the additional costs that come with a public listing.

"Being a public company is quite a time-consuming thing and a distraction and probably involves us incurring a couple of million pounds of extra overheads a year at least," Fink noted

For these reasons, Fink expects most hedge funds to remain private to avoid exposing themselves to public scrutiny.

"For every one that goes public I expect three or four to sell out to private buyers," he predicted.

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