Man pushes on with broking arm float

By ROBERT LEA
Updated:

 

Man Group barged ahead with the $3.8bn (£1.9bn) flotation of its broking arm today despite having to cut the offer price amid wobbling international markets.

London-based Man, the biggest quoted hedge fund group in the world, was today forced to take a significant cut of up to $1bn in the cash it is raising from the demerger of its broking arm.

Despite putting a marker of $36 to $39 a share on the initial public offering of MF Global to be listed on the New York Stock Exchange, the shares were today priced at $30. Man is selling about 80% of MF Global, and will be banking $2.8bn from the float against the $3.75bn after expenses it could have expected at the top of its indicative range.

The float comes amid serious jitters on the world's markets.

US Federal Reserve chairman Ben Bernanke last night warned of a debt contagion being spread from the American subprime mortgage lenders to the uncreditworthy borrowing-market. The wobbles have sent two hedge funds backed by Wall Street investment bank Bear Stearns and specialising in the subprime market into meltdown, with investors likely to see very little or no money back.

Man gave no sign of why it had cut the float price.

Analysts said its insistence with going ahead now at a reduced level could give some negative indication as to where the market for new flotations might be going later in the year. Man chief executive Peter Clarke said he wanted to go ahead with the float to enable Man to concentrate on the management of hedge funds and other alternative investment strategies.

'We believe this focus will deliver attractive and innovative products for our investors and continued strong returns for our shareholders,' he said.

MF Global is the fourth-largest operator in the global futures market.

It grew rapidly after 2005 when Man Group acquired assets from bankrupt Refco.

The brokerage, which handles trades in futures, options and other derivatives, saw profits rise almost 300% to $188m in the year to March on revenue of $5.7bn.

That the float got away was welcomed by City investors in Man Group. The shares pushed on towards fresh highs, advancing by 9½p to 612p.

Analysts believe Man Group will now be free to restructure its balance sheet.

That, along with a 20% residual holding in MF Global, could see up to $2bn of cash being freed for shareholders, according to Dresdner Kleinwort analyst Bill Barnard.

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