LONDON Tetragon Financial Group has bought Polygon Management, once one of the world's biggest hedge funds and a high-profile casualty of the financial crisis, for $98.5 million, to expand its asset management business.
Tetragon (TFG.AS) said in a statement on Monday it will use 11.7 million of its non-voting shares to buy Polygon, founded in 2002 by Paddy Dear and Reade Griffith, as well as its stakes in LCM Asset Management and GreenOak Real Estate. Dear and Griffith are also directors of Tetragon.
Based on Friday's closing share price, the transaction is valued at $98.5 million.
"This is a continuation of TFG's strategy to expand its asset management platform and diversify and strengthen its income streams," Griffith said in the statement.
London and New York-based Polygon once managed $8.5 billion before its flagship fund lost almost half its value in 2008. Last year the firm, which has since wound down that fund, hired its first CEO to help lead a restructuring of its business.
According to Monday's statement, Polygon's hedge fund assets have fallen to just $450 million, managed across three principal strategies - European event-driven equities, convertible and credit securities and mining stocks, for which it recently launched a new fund.
Polygon also holds a 13 percent stake in real estate firm GreenOak, which manages $1.9 billion, and LCM, a manager of $4.5 billion in loan assets.
The firm also has other unspecified products managing around $600 million in assets that would be included in the transaction. One of those other products has approximately $25 million of contracted management fee income due over the next three years, Tetragon said in the statement.
Tetragon will repurchase up to $150 million of its non-voting shares, the statement also said.
(Reporting by Tommy Wilkes; Editing by Louise Heavens and Stephen Nisbet)