Man Group makes a fresh play in the US with a $70m deal to buy Silvermine

The hedge fund has made four American acquisitions this year

The office building of the London-Based Man Group, one of the world's largest traded hedge fund, is pictured on October 5, 2009 in Pfaeffikon, Switzerland
Man Group has made a series of acquisitions this year Credit: Photo: Getty Images

Man Group has made its fourth major American acquisition of the year, after agreeing to pay up to $70m (£45m) for a leveraged loan manager.

The London-listed hedge fund group said its purchase of Silvermine, which manages $3.8bn, will enable the firm to expand in US credit trading.

Silvermine, which is owned by its employees, focuses on issuing collateralised loan obligations. These products pool together high-risk loans and have regained popularity after the financial crisis wiped out the market. New issues in the US are expected to pass the previous annual record of $94bn this year.

“As part of Man Group, Silvermine will benefit from our world class infrastructure, distribution and access to capital and we are confident that this acquisition will bring meaningful advantages to our investors by further diversifying our offering,” said Mark Jones, co-chief executive of Man GLG.

The cash deal will include a $23.5m initial payment and other amounts later depending on performance.

The firm’s assets under management have risen 25pc this year to $72.3bn, with $16.2bn coming from its acquisitions. Man’s assets remain below the peak set in 2008, despite a series of acquisitions and the merger with GLG in 2010, as its AHL computer-driven funds have dragged on its overall performance.

Man Group’s other deals this year include buying the quant manager Numeric for an initial $219m in cash, plus $275m more after five years. The firm has also bought a $1.2bn portfolio of Merrill Lynch’s funds of hedge funds for up to $32.9m, and a smaller rival Pine Grove for an undisclosed amount.

“Man is using its surplus capital to build out its US distribution platform. The strategy makes sense in our opinion since organically building a US distribution platform would take years and may not be successful in the end,” said Peter Lenardos, analyst at RBC Capital Markets.