Man Group Launch Beats Forecast

by Carla Johnson, Investors Offshore.com

18 April 2006

Following the closing of the final phases of its most recent product launch, Man Group plc announced on Friday that its most recent product launch has raised over US$2.3 billion of client money.

Stanley Fink, Chief Executive of Man Group plc, said: “This is by far the largest global private client launch of a hedge fund product ever done, and the strong demand follows the product's return for investors of more than 300% over nearly a decade. It is a significant milestone for Man Investments and for the hedge fund industry as a whole which we have achieved by leveraging our global relationships and maximising our resources across the whole business, exceeding our own best expectations in the process.”

In the pre-close trading statement, released on 31 March 2006, the launch had been estimated to raise around $2 billion of client money. At the same time, Man Group announced that its anticipated before-tax profits will be ahead of market expectations for the year ending March 31, 2006.

Sales for the year are estimated to be $9.0 billion, split 58% private investor product and 42% institutional product. Sales for the three months to 31 March 2006 are estimated to be $3.4 billion.

The three months sales comprise the previous global launch, Man BlueCrest Ltd, which raised $0.4 billion; joint ventures of $1.1 billion (which includes the first phase of the Man IP 220 offerings); other private investor sales which mainly relate to open-ended funds of $0.8 billion; and institutional sales of $1.1 billion.

Reflecting the level of sales, funds under management have risen and are currently estimated to be over $48 billion, up from $43.0 billion at 31 March 2005 ($45.8 billion at 31 December 2005). The split of funds under management is private investor $29 billion (31 March 2005: $25.3 billion) and institutional $19 billion (31 March 2005: $17.7 billion).

Redemptions were $5.9 billion, of which private investor constituted $3.0 billion. The company said that as a percentage of funds under management, redemptions remain "at the low end of long term experience".

Positive investment movement added around $1 billion in the quarter.

Man expects its net management fee income will be in line with consensus market expectations, up by 15%, reflecting the increased level of funds under management. However, the firm expects its net performance fee income to have increased strongly over last year and above consensus market expectations, reflecting good performance from its managers, particularly at its flagship AHL fund.

Brokerage net income is expected to be up over 15%, excluding a small operating loss and the exceptional integration costs arising from the acquisition of Refco in November 2005.

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