Investors in Man Group, the world's largest quoted hedge fund manager, are in line for a $2.75bn (£1.3bn) handout after the successful summer listing of its brokerage unit, MF Global. However, the shares closed lower as analysts had been hoping for an extra $1bn in share buy-backs and other returns which did not materialise.
The handout is still to be confirmed by shareholders, but will come in the form of an issue of B and C shares, depending on investors' preference for capital or income, worth some 70p a share.
It will be the largest return of capital ever for Man Group, which celebratesits 25th birthday next year.
Despite the turmoil in credit and equity markets, the company also reported a 21 per cent jump in first-half profits to $820m. Assets under management rose by more than 11 per cent in the first six months of the year to $68.6bn, boosted by strong performance growth and new hedge-fund product launches.
The company raised $8bn from new funds over the quarter as its products maintained momentum despite the credit crunch impacting the big banks. Total funds under management have grown to more than $70bn in the five weeks since the close of the first-half reporting period. Reflecting the strong position the company sees itself in, the interim dividend was more than doubled to 8.03p a share.
Peter Clarke, the chief executive, believes that the company's strategy and products will offer growth regardless of conditions in the wider market. He said: "We have a long track record and have been offering hedge funds since the mid-Eighties. Market turbulence tests management and products, but none of our funds is highly leveraged and they are managed with a conservative risk profile. As for the return of capital, we decided it was sensible to stick to the strategy we outlined when we first decided to sell MF. We have more than $1bn more than our current capital requirement, but in this environment having a cash surplus puts us in a strong position."
Analysts' reaction to the results was mixed as some expressed disappointment that the company was not returning more of its excess capital to shareholders. The more bullish were impressed by Man's ability to raise more funds in difficult conditions. The shares closed 6p lower at 553p, valuing the group at £10.9bn.