The US-listed hedge fund manager GLG Partners is set to join the gold rush for deals in China and India, after buying a 29 per cent stake in a local private equity group.
The alternative asset manager yesterday announced it had paid £17.1m for the holding in Origo Sino-India, an investment and strategic consulting company focused on the private equity markets in the two emerging markets. It is GLG's first move to establish a presence in the region.
The groups have signed a memorandum of understanding to target asset management and advisory opportunities in China, India and other emerging markets.
One source close to the group said it was the sensible move for GLG, despite the relatively small size of Origo: “These guys have an impressive network in China and India – their contacts are top notch. It means GLG don't have to enter the markets and build a business from nothing.”
Greg Coffey, a senior managing director of GLG, said: “Origo owns an interesting portfolio of proprietary investments, primarily in China and India, and has an exciting pipeline of investment opportunities in these markets.”
Along with the deal, Origo will provide GLG with research services, such as local analysis and the generation of investment opportunities, for three years in a contract worth £3m.
GLG, a multi-strategy firm, was launched by three former partners of the US banking group Lehman Brothers in 1995. By the end of last year, managed net assets under management had reached $24bn.
In July, the hedge fund – one of the largest in Europe – expanded in the US by listing on the New York Stock Exchange, joining rivals such as KKR and Blackstone Group on the public markets, via a reverse takeover. It was bought by a special purpose acquisition company called Freedom Acquisition Holdings, which acted as an NYSE shell company, giving the group a value of $3.4bn when it joined the market. It has since started investing in expanding globally; GLG said last year it would target the Middle East and Asia.
GLG is just the latest financial services group to look for opportunities in China and India. Rival UK fund The Children's Investment Fund (TCI), which derailed Deutsche Börse's bid for the London Stock Exchange in 2005, revealed it was in talks to buy Chinese Estate Holdings, a property company last year. TCI faced competition from US funds Och-Ziff Capital Management, Marathon Capital and Fortress Investment.
Other financial services groups have looked to team up with local groups to gain the appropriate licensing to operate in China. Citigroup became the latest investment bank to partner with a Chinese broking firm, Central China Securities Holdings, in January. This follows similar agreements from companies including Morgan Stanley and Credit Suisse.
Source: Independent