In a rare instance of a merger not driven by the government or forced by downsizing, a pioneering Chicago fund of hedge funds is consolidating with a sister firm. Glenwood Capital Investments, founded in 1987, joins Man Global Strategies, which focuses in part on hedge funds, in a unification that Man Group, the parent of both, hopes will create vast synergy.
“If you can improve the information that you have on managers, you can deliver more transparency,” notes John Rowsell, who was in charge of Glenwood and will lead the new Chicago-based Man Glenwood Strategies as its chief investment officer. The firm — whose combined assets under management total $7 billion — will have a powerful U.S. presence and an international reach, given its domestic Glenwood clout and Man Global offices in London and Hong Kong.
The merger is the latest in a long series of Chicago chapters in the history of funds of funds, invented in 1971 by Richard Elden, founder of that city’s Grosvenor Capital Management (see “Sweet Home Chicago,” November 2008). In 2000, Man acquired Glenwood, which was founded in 1987 by Frank Meyer, a former partner at Grosvenor. The new arrangement is expected to give Glenwood more tools to help clients affected by difficult markets, especially those who need more liquidity. Rowsell says the recent market turmoil has made it clear that some hedge funds have too much money locked up in illiquid assets, making it difficult in many cases for investors to cash out when they need to. In turn, Glenwood’s reservoir of hedge fund knowledge is expected to be a boon to clients of Man Global Strategies.
The benefits may not be immediately apparent, however. David Gold, a manager research consultant at Watson Wyatt Worldwide, a New York–based investment consulting firm, says the initial result may be self-serving in that it will curb competition for customers. Longer term the deal should give clients more flexibility in choosing whether to put assets in commingled funds of funds or keep their money separate.
