Man Group is to launch a private markets business after announcing today that it had acquired Aalto Invest Holdings, the London-based property manager, which oversees $1.7 billion of investments.
By acquiring the business, Man Group will open a new arm, Man Global Private Markets (Man GPM), which it said will give investors a “broader range of investment strategies to complement existing capabilities in public markets”.
London-based Aalto, founded in 2010 by Mikko Syrjänen and Petteri Barman, invests in single-family homes in the US and residential and commercial property in Europe. Real estate constitutes approximately $700 million of its aggregate funds under management; real estate debt constitutes $900 million; while the remaining $100 million is invested in listed equities.
It is understood Man Group will pay a maximum of $232 million for Aalto, with payments being staggered over eight years.
The group saw its share price climb nearly 15 percent in early trading this morning after announcing the deal alongside third quarter asset growth that beat estimates. Net inflows at the hedge fund were $1.3 billion in the third quarter, and assets under management increased from $76.4 billion at the end of June to $80.7 billion at the end of last month.
According to official acquisition documents, Man Group’s board fully supported the purchase, believing it will “provide attractive strategic, commercial and financial benefits” to the business and shareholders. In particular, the deal is expected to broaden and diversify Man Group’s investment management capabilities and enable it to expand in the US, through Aalto’s US-based investment team. Man Group also said it hoped the acquisition would enable it to develop strategies across other private markets such as credit and infrastructure.
“In line with our strategy to continue to diversify the firm and our offering for clients, this private markets capability is complementary to our broad offering in liquid strategies,” said Luke Ellis, chief executive officer of Man Group.
“As co-heads of Real Assets, Petteri and Mikko will work to help to grow this area of the business, which will offer investors exposure to longer duration capital products and benefit from Man Group’s world-class infrastructure, broad investment expertise and global resources.”
Aalto confirmed its management team would continue under the leadership of Syrjänen and Barman, who would also be appointed as co-heads of real assets within Man GPM and would report to Jonathan Sorrell, the president of Man Group.
“Since its foundation, Aalto has operated a client-focused business model over multiple market cycles. We are now at the point in our evolution where the additional infrastructure and diverse investment expertise available at Man Group, as part of Man GPM, enhances our business and enables us to create significant value for existing and future clients,” said Syrjänen, who is also chief executive officer at Aalto.
The transaction is expected to be completed in January 2017, subject to regulatory approvals.
As of September, 30, 2016, Man Group’s funds under management were $80.7 billion, making it one of the world’s largest independent alternative investment managers.