As part of the acquisition, Man Group will integrate FRM with its multi-manager business. As a result, the combined multi-manager business will have assets of around $19 billion, making it the biggest independent non-US based fund of hedge funds.

No consideration will be paid up front, with contingent consideration dependent on asset retention. The deal will involve a scheme of arrangement under Jersey law and is also subject to the satisfaction or waiver of customary conditions .

The acquisition is expected to be completed before the end of the third quarter of this year, Man Group said in a statement.

Scale

“The scale of its combined investment resources plus the sophistication and accelerated growth of Man’s managed accounts platform will benefit investors in the flagship funds of both entities. With additional scale and resources, the combination has the potential to attract assets and deliver strong returns to investors,” Man Group said.

The contingent consideration to be paid over three years comprises a maximum of $82.8 million in cash, net of total net assets acquired and dependent on asset retention, and a 47.5 per cent share of performance fees attributable to FRM’s existing funds under management over three years, subject to a cap.

The combined business will trade under the FRM brand and will be led by Luke Ellis, chief executive of Man Multi-Manager and previously managing director of FRM.

Blaine Tomlinson, founder of FRM, will become non-executive chairman of the combined business. Sumitomo Mitsui Trust Bank, which advises a significant portion of FRM’s investors, has endorsed the acquisition by agreeing a new ten-year strategic relationship agreement with Man.