LONDON, April 11 (Reuters) - Hedge fund firm Man Group has been able to unlock $550 million in capital following a change in its regulatory status that has reduced its corporate risk profile.
The reduction reflects the less balance sheet-intensive nature of the group’s activities relative to earlier years, such as fund seeding activities and the scale of its guaranteed products business, Man said in a statement on Thursday.
The change in Man’s classification has been confirmed by regulator the Financial Conduct Authority. Previously, the firm was in a category that required higher capital levels to offset risk.
Man Group’s change in status frees up $300 million from the removal of a mandatory capital planning buffer.
It will also be able to add a further $250 million to its cash reserves because of the reduced capital requirements of its new status. This will take its total surplus capital to around $920 million from Jan 1. 2014, taking into account its existing cash reserves.
Man’s shares were up more than 7 percent by 0727 GMT.
Reporting by Sinead Cruise and Chris Vellacott. Editing by Jane Merriman