Monday, 7 June 2010

Hedge Fund Takeovers - Martin Currie and Schroders Acquire

One of the themes I have written about for 2010 is that of M&A in the hedge fund business. The latest example is that of Martin Currie, the Scotland-based manager, taking over the Sofaer Capital European long/short equity business. So this deal is not for the whole of Sofaer's hedge fund business, just the European equity part of it, and no price details have been disclosed.

Citywire report that Martin Currie Investment Management has agreed to acquire the $280 million (£190.6 million) Sofaer Capital European long/short equity business as of July 1.

The two principals in charge of the fund, Michael Browne and Steve Frost, will move to Martin Currie and continue to run the $140 million vehicle. The pair has worked together on European equities for more than 20 years and began to co-manage the Sofaer Capital European hedge fund, which has delivered an annualised return of 8% versus -0.6% by the MSCI European benchmark, in January 2001.

Subsequent to this posting Schroders has acquired a 49% interest in RWC Partners, a London-based hedge fund management firm. At the date of completion of the transaction, RWC had gross business assets of approximately £10 million and its total assets under management are just over €2 billion.

There are a couple of points of interest in this. Schroders acquired a minority, and have no formal agreement in place to acquire the balance of RWC Partners. This suggests that the sellers were negociating from a strong position.

The other point of interest is that the two fund managers of Schroders Income Fund (the top performing income over 3 years) who recently resigned from Schroder Investment Management were to join RWC in August! The managers concerned, Nick Purves and Ian Lance, were given the opportunity to veto the deal between RWC and Schroders, but declined to do so.  

The momentum at RWC has been maintained by the addition of a team to run absolute return and currency funds - Peter Allwright and Stuart Frost will join from Threadneedle, where they ran the £2bn Threadneedle Absolute Return Fund. The pair have experience running global and European bond funds, so it is natural to expect more bond products to follow.

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