Beleaguered fund manager Man Group is buying Financial Risk Management (FRM), a US global hedge fund research and investment specialist with around $8bn (£5bn) of funds under management. There is no upfront payment, but a maximum $142m, based on asset retention and net fee performance, could be paid over the next three years; of that, the maximum cash consideration would be $83m. Combining FRM with Man is expected to deliver annual cost savings of $45m.
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The structure of the deal has raised eyebrows because FRM is selling itself for less than the fund's annual management fees. That's either a very good deal for Man or a question mark against FRM's asset quality.
