Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
The New York Times – Barclays shareholders overwhelmingly approved the bank’s sale of asset manager Barclays Global Investors to BlackRock for about $14 billion (8.3 billion pounds) on Thursday, but staff staged a protest against pension changes.Barclays chairman Marcus Agius told shareholders the bank was in the final days of consultation about controversial changes to its pension plan for UK staff, and could make changes to alleviate concerns and head off the threat of a strike.
Reuters – Bank of America Corp’s primary investment management unit is drawing lower than expected bids after its likeliest suitor, BlackRock Inc, inked a blockbuster deal to buy Barclays Global Investor, the Financial Times reported, citing people close to the matter.
Bank of America has been trying to sell its Boston-based Columbia Management unit since earlier this year, but the bank has so far not announced a deal for the unit.
The company is hoping to get at least $3 billion from a sale of Columbia Management, but bids so far have come in closer to $2 billion, the paper said, citing the people.
Barrons – A big question surrounding BlackRock’s $13.5 billion purchase of Barclays Global Investors, including its iShares exchange-traded-funds business, is how effectively a passive management group can work with an active one.
The combined firm will have more than 9,000 employees in 24 countries. Barclays will retain a 19.9% stake in the firm, which will manage a combined total of $2.7 trillion in assets.
"For two large, successful asset managers, it’s never an easy task to integrate," says Charles Rauch, analyst at Standard & Poor’s, which lowered its long-term credit rating on BlackRock a notch, to single-A-plus, citing "real" integration risk, among other things. However, some of the risk is mitigated by the fact that BlackRock and BGI have few overlapping operations, he adds.
Forbes – Consolidation in the asset management industry is set to intensify as encroaching regulation and client demands for independence force banks to hive off fund arms, Barclays said on Friday.
Major investment banks were finding it ever harder to keep hold of their fund divisions, Barclays President Bob Diamond told a conference call after agreeing to sell Barclays Global Investors to BlackRock for $13.5 billion.
‘The investment management industry is in early days of consolidation… We’ve made a clear decision that this trend is in place for a while and that is around independence,’ he said.
West Palm Beach (HedgeCo.net) – BlackRock, Inc. confirmed that negotiations are ongoing with U.K.’s third-largest bank, Barclays Bank plc, about the potential purchase of Barclays Global Investors (BGI), including the iShares business.
“The discussions are not yet concluded and there are a number of significant open issues which could affect the nature and terms of any transaction,” Barclays said in a statement.
BlackRock’s BGI buyout will break its own record in a hedge fund transaction, when in 2006 BlackRock took over Merrill Lynch’s asset management business for $8.5 billion. The unconfirmed selling price is $12 billion to $13 billion. Other contenders for Barclays Global Investors include the Bank of New York Mellon and some Kuwaiti sovereign wealth funds, among others.
Alex Akesson
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Financial Post – Barclays PLC, the U.K.’s third-largest bank, is in talks with BlackRock Inc. and other bidders to sell its asset management division for more than US$10-billion.
BlackRock, the world’s biggest publicly traded asset manager, is the leading contender to buy Barclays Global Investors, people familiar with the situation said June 6. London-based Barclays has also held talks about selling BGI to Bank of New York Mellon Corp, the people added. The bank is seeking more than US$12-billion for the unit, and may keep a 20% stake in the merged company, one of the people said.
Retaining a stake "is an intelligent way to structure the deal," said Danny Clarke, a Liverpool-based analyst at Capital Group PLC, who has a "hold" rating on Barclays. "It strikes a balance between short and long-term goals, boosting capital and retaining some earnings."
Financial Standard – Pension funds around the world are expected to pump up their $547 billion hedge fund allocation by more than $60 billion before December as they look to balance assets and liabilities, new research shows.
Hedge fund managers are expected to heap an extra $63 billion into their coffers from pension funds and family offices.
But insurance companies, private banks, endowments and foundations are all likely to decrease their allocations to the sector, according to Barclays Capital.
The report, which surveyed 300 investors and 100 hedge fund managers representing $873 million of hedge fund assets, noted investors were ready to aggressively allocate their cash balances but will demand liquidity in the process.
Bloomberg – Hedge funds may increase assets by more than 8 percent this year as clients led by pension plans and rich families invest $50 billion of the cash they held while financial markets fell, according to a report by Barclays Plc.
Investors have about 14 percent of their assets in cash, according to the survey released today by Barclays Capital, the investment-banking unit of London-based Barclays. Almost 80 percent plan to allocate money to hedge funds in 2009.
“We are seeing that investors are now realizing that hedge funds are surviving as a compelling investment proposition and as an important segment of the broader asset-management industry,” Andrea Gentilini, the New York-based author of the report, said in a telephone interview.
West Palm Beach (HedgeCo.net) – Alpha Magazine unveiled the 2009 Europe Hedge Fund top 50, showing that that Europe was not immune to investor angst over hedge funds. A wave of investor withdrawals shapes the magazine’s annual ranking of the 50 biggest European single-manager hedge fund firms, as total assets fell to $285 billion as of January 1, 2009, from $405 billion a year earlier, a 30% drop.
Europe’s hedge fund business may be looking at an encouraging longer-term picture, however. The region boasts five of the world’s 20 biggest hedge fund firms — led by two London-based powerhouses, Brevan Howard Asset Management and Man Investments.
Brevan Howard’s total assets surged from $21 billion at the end of 2007 to $26.8 billion when this year began, elevating the firm from third to first in Alpha’s 2009 Europe Hedge Fund 50. Man Investments had a similarly strong year; its overall assets grew from $20.9 billion to $24.4 billion, lifting the firm two rungs to second place.
The two top European hedge fund firms in last year’s ranking have been taken down a few notches. Barclays Global Investors falls from No. 1 to No. 3, and GLG Partners drops from No. 2 to No. 8; the firms saw their assets drop, respectively, 35% and 52%.
Alpha’s Europe Hedge Fund Top 5
Rank Firm Total Capital ($ millions) 1 Brevan Howard Asset Management $26,840 2 Man Investments 24,400 3 Barclays Global Investors 17,000 4 BlueBay Asset Management 16,700 5 Bluecrest Capital Management 13,273
For Alpha’s 2009 Europe Hedge Fund 50, data was gathered through questionnaires completed by hedge fund managers, supplemented by extensive Alpha staff research. We provide each manager’s total assets under management as of January 1, 2009, unless otherwise indicated. Where possible, we also show assets at the individual fund level, with 2008 net returns, for the five biggest funds run by a firm.
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Reuters – Hedge fund and traditional money management firms hard hit by last year’s market meltdown are poised for a surge of mergers and acquisitions to bolster depleted assets and widen sources of revenue.
"We’re going to see a massive wave of consolidation across the entire asset management industry, over the next 12 to 24 months," Brian Reilly, Barclays Capital’s head of asset management investment banking, told a gathering of hedge fund executives at the SkyBridge Alternatives Conference.
Banking Business Review – The board of directors of Barclays has entered into an agreement for the sale of its iShares business to Blue Sparkle, a new limited partnership established by CVC Capital Partners, for a total consideration of approximately $4.4 billion.
Barclays has said that this transaction gives the company the opportunity to maximise value through the sale of a business which represents a channel for Barclays Global Investors (BGI); and provides Barclays the opportunity to participate in future value creation through a continuing commercial relationship with the iShares business and the potential crystallisation of consideration through a cash-settled participation interest entitling Barclays to receive a portion of the value uplift on iShares if certain performance-related hurdles are met.
Business24-7 – Stability, and not necessarily an upward move by economies, would be enough to attract investors back to alternative investments such as hedge funds, says Dr Frank Gerhard of Barclays Capital.
The crisis has made investors focus more on due diligence and, at the same time, turned attention back to fundamentals and to issues such as the integrity of managers. "Those managers are going to benefit going forward if they address structural issues of leverage, transparency and uncertainty around liquidity," said Gerhard, the company’s Director and Head of Product Strategy for Fund-Linked Derivatives.
