Reuters- Stock market disquiet caused by the U.S. subprime mortgage crisis has hit flotations in the booming hedge fund sector, as offerings from Man Group and U.S. firm Third Point raised less than targeted.
Man Group (EMG.L: Quotazione, Profilo), the world’s largest listed hedge fund firm, said on Thursday the initial public offering of its U.S. broking arm MF Global priced at $30 a share, well below an indicative price range of $36 to $39, raising a lower-than-expected $2.9 billion (1.4 billion pounds).
“The price we achieved was below the range. That is because the market in the U.S., in particular for financial institution stocks, is weak,” Man Chief Executive Peter Clarke told Reuters in an interview.
“The backdrop to financial institution weakness does appear to be subprime … The investor base in the U.S. is seeking to reduce rather than increase exposure to financial institution stocks.”
At 5 p.m., MF Global (MF.N: Quotazione, Profilo) shares were down 7.6 percent at $27.73 in New York, while Man Group shares closed down 0.3 percent at 601 pence in London.
“While the reduction in price is not that significant for the Man stock price, it is unhelpful for sentiment, given that any reduction in an IPO, whether in price or size, is likely to cause an overreaction in the current markets,” Dresdner Kleinwort analyst Michael Sanderson said to clients.
