GLG Partners, the London-based hedge fund manager that obtained a New York Stock Exchange listing last year through a reverse takeover, has reported virtually flat assets under management
GLG Partners, the London-based hedge fund manager that obtained a New York Stock Exchange listing last year through a reverse takeover, has reported virtually flat assets under management at the end of the first quarter, with net inflows of 3.1 per cent and currency gains all but cancelled out by negative performance.
GLG also reported a net loss of USD226.3m for the first three months of this year, but this was largely attributed to the recognition of compensation-related expenses associated with the company’s reverse acquisition by Freedom Acquisition Holdings last November.
Under US generally accepted accounting principles, similar but diminishing compensation expenses will affect the company’s formal results up to the end of 2012 but have no economic effect or impact on adjusted net income. In fact GLG’s non-GAAP adjusted net income for the quarter was USD33.8mm, up 142.2 per cent year-on-year, while net income per share was up 150 per cent at USD0.10.
The company’s assets under management, net of assets invested from other GLG managed funds, amounted to some USD24.65bn at the end of March, slightly up from USD24.61bn in December but an increase of 53.2 per cent over the past 12 months. Net inflows of 3.1 per cent during the quarter compared with just 0.1 per cent in the first three months of 2007.
GLG chairman and chief executive Noam Gottesman was upbeat in his statement to the market, saying: ‘While market conditions have presented many challenges in the first part of this year, they have also presented many opportunities and we remain optimistic about our prospects.
‘We have successfully managed this business through a broad spectrum of environments over the past 12 years and our focus remains on investing in our people, scaling our infrastructure and delivering superior investment performance.’
However, the results were overshadowed by uncertainty over the impact of the departure scheduled for October of star manager Greg Coffey, who at the end of last year was managing almost a third of GLG’s assets in his Emerging Markets Fund and three other vehicles and is reckoned to have generated as much as 60 per cent of the firm’s performance fee income in 2007.
Coffey handed in his resignation on April 14, withdrew it the following day but a week later confirmed his decision to leave, following a transition period up to October. He is expected to launch his own asset management business.
GLG has indicated that it is ready to waive penalties and redemption gate provisions for the Emerging Markets Fund for investors seeking to withdraw their money on the redemption date following Coffey’s departure, November 3.
During a conference call to comment on the results announcement, Gottesman said in the worst-case scenario GLG might be left with as little as USD2bn in its emerging markets strategy, compared with USD6.3bn managed by Coffey at the end of April. So far the firm has received redemption requests totalling USD1.7bn.
The current total represents a decline of around USD1bn from the total at the end of last year. GLG’s emerging markets strategy experienced a decline of 5.3 per cent in the first quarter and fell by a further 14 per cent in April, leaving its performance for the year so far down by some 19 per cent. Overall GLG’s funds are down by 7 per cent this year.
