Man Group, the acquisitive hedge fund group listed on the London Stock Exchange, has made a strong commitment to growing its presence in private equity by acquiring large stakes in Westport Private Equity and Parallel Ventures.
Westport, a Birmingham-based fund of funds manager investing in mid-market buyout funds, was founded in 1998 by chief executive John McCrory and chairman Paul Whitney. In 1997, Whitney established Parallel Ventures to make direct co-investments in companies alongside private equity managers. In 1999, Parallel acquired a 67 per cent stake in Westport, the majority of which has now been passed on to Man. Man has also purchased a 25 per cent interest in Parallel.
The deals come at a time when competition in the 120-strong global private equity funds of funds market is intensifying. According to Paul Whitney, who was closely involved in both transactions, both Westport and Parallel are to benefit significantly from the new partnership with Man.
“This is far from a defensive step. It’s in fact a very expansionist move. Westport is an excellent platform on which to build a much larger fund of funds business. We’ve been acutely aware for some time that Westport was increasingly facing competition from fund of funds groups coming out of the US, which meant we needed to develop our presence in the US market. Man is a highly skilled hedge fund investor with access to a different client base and will be very helpful to both Westport’s and Parallel’s fundraising going forward.”
Whitney also highlighted Man’s “renowned” excellence in maintaining sophisticated operational and reporting systems and processes that investors were increasingly paying attention to when selecting alternative asset managers.
Man will combine Westport’s largely institutional asset management business with the more retail-focused private equity franchise of RMF, the Swiss hedge fund manager it bought earlier this year. The new entity will manage a total of £2.1bn of private equity assets.
Parallel Ventures will continue to independently make private equity co-investments. Since 1997, the group has invested E1.2bn and generated E550m in realised returns, which equates to a realised annual IRR of over 50 per cent. Paul Whitney is Parallel’s controlling shareholder. John McCrory remains a shareholder in Westport.