LONDON U.S. buyout firm TPG Capital agreed a 508 million pound ($802 million) takeover of hedge fund administrator GlobeOp GO.L as the first step in building a presence in the business of servicing the $2 trillion hedge fund industry.
TPG is offering 435 pence per share in cash for London and New York-based GlobeOp, which administers $173 billion in client assets and which last month kicked off a strategic review to try and boost its share price.
The deal marks a premium of nearly 50 percent to GlobeOp's January 5 share price, just before it announced it was in talks with TPG, which beat private equity rival Advent International to the deal, according to a source familiar with the situation.
GlobeOp shares, which had fallen from 440p last July to below 300p early last month, were up 22 percent at 432.13p by 1136 GMT.
TPG intends to invest in expanding GlobeOp's business and hopes to bolt on other businesses serving the hedge fund industry, the source said.
The U.S. private equity group has significant experience in the so-called financial technology sector, with investments that have included account processing group FIS Global and insurance software business Vertafore.
Investors continue to put their money into hedge funds, despite a disappointing 2011 in which the average fund lost just over 5 percent while the S&P 500 .SPX made a total return of 2.1 percent, according to Hedge Fund Research.
As part of the deal, GlobeOp CEO Hans Hufschmid and his senior management team will continue to run the company and will reinvest 70 percent of their proceeds from the sale in the firm.
GlobeOp, which publishes monthly updates of client flows and redemptions requests, said last week that hedge fund exit requests had fallen to a record low.
"GlobeOp is a strong global financial services company with a high-quality offering and a robust business model, which we plan to invest in and grow," TPG partner Bryan Taylor said in a statement.
Shareholders including Aberforth Partners and Standard Life Investments have indicated they will accept the deal, meaning that close to 44 percent of GlobeOp's investor base is backing the deal.
JP Morgan Cazenove (JPM.N) advised TPG on the deal, while Evercore Partners advised GlobeOp.
($1 = 0.6337 British pounds)
(Additional reporting by Sudip Kar-Gupta; Editing by Paul Sandle and David Holmes)