Sunday, June 24, 2007
GLG Partners, the leading European hedge fund adviser with over $20 billion in assets under management, today announced that it would go public in the United States. GLG will accomplish this transaction through a reverse merger with Freedom Acquisition Holdings, Inc, a special purpose acquisition company currently listed on the American Stock Exchange. Upon consummation of the transaction, FAH will rename itself GLG Partners, Inc. and re-list on the New York Stock Exchange. The transaction values GLG at $3.4 billion dollars and FAH´s current shareholders will hold 28% of the new entity.
GLG was formed by three former Goldman Sachs wealth managers in 1995 as a division of Lehman Brothers. GLG is now independent, but Lehman still owns a stake in the company, and last week GLG co-founder Jonathan Green sold some of his ownership stake to, Istithmar, an investment arm of the government of Dubai and Oppenheim, the largest private bank in Germany, giving each a 3% stake.
The GLG transaction comes on the heels of Friday´s successful offering by Blackstone and is yet another U.S. public offering by a private equity or hedge fund fund adviser. It is notable for this and another reason. GLG is using the SPAC mechanism to go public. I´ve blogged before about how the growing presence of SPACs and private equity/hedge fund advisers highlight the absurdities of the Investment Company Act. Public investors are shut off from investing in private equity and hedge funds by this law. However, these investments offer desirable and unique characteristics such as alpha. So, investors desiring these benefits substitute the next best thing, that is the advisers and SPACs. But both of these investments have their own problems and are likely more risky than the funds themselves. GLG is now pushing the envelope by combining the two.
But, there are two good things about this transaction. First, it highlights the strength of the U.S. capital market and its continued ability to attract foreign listings. Second, chalk another one up for Perella Weinberg partners which advised GLG -- after a slow start they are picking up steam in the league tables.