ZURICH (Reuters) - Emmanuel Roman, named chief operating officer of Man Group after Europe’s biggest hedge fund group acquired his GLG this year, has quickly built a power base to rival that of chief executive Peter Clarke.
Indeed, the mild-mannered Clarke is seen facing a stiff leadership challenge from the tough-talking Roman, known as ‘Manny’ to hedge funds industry insiders and widely seen as de facto boss of the enlarged Man Group (EMG.L).
Roman, a wine collector with a penchant for Rhone Valley vintages, has bolstered his power base by appointing GLG colleagues to key positions, said a Europe-based executive, asking not to be named.
“He is the real power in the group now,” said one London-based Man executive who also asked not to be named, adding Clarke was more focused on products and clients, and not so much on the day-to-day management of top staff.
How the two men manage their roles will determine the success or failure of a takeover viewed as expensive.
While Clarke won’t be a pushover, a senior industry source said he will have to concede much to the GLG side to retain their talent if he wants the deal to succeed.
“Everyone knows Man paid far too high a price. But for Manny Roman and his GLG partners it was the deal of the century,” this person said, requesting anonymity.
At the time of the merger, GLG was leaner than its larger rival, with 300 staff managing $24 billion (15.5 billion pounds) against Man’s 1,600 staff and $40 billion in assets.
Roman has slashed jobs to trim the enlarged group to a more efficient size — living up to expectations from analysts who had said the new group would come to resemble the leaner GLG rather than the bloated Man.
Man assets had halved from a June 2008 peak as the crisis bit and clients pulled money after losses from Bernard Madoff’s fraud at the RMF fund of funds unit and the first annual loss of flagship fund AHL, which held half of Man’s assets, in 2009.
Before being named COO in September, Roman was already responsible for integrating GLG along with John Rowsell, former head of Man’s U.S. fund of funds unit Glenwood Capital which was merged with RMF in April 2009.
“Roman was GLG’s top man, while Rowsell was in a merged unit finding its way in a new structure. It was not a fair fight, and Manny shaped the face of the new group from that position,” the London-based executive said.
In 2005, Roman became a GLG partner after 17 years at Goldman Sachs (GS.N) where he rose to head the tough prime brokerage business and was said to be on an eight-figure deal.
Two years later, GLG was listed in the United States via a reverse merger with a publicly traded company, giving Roman and his two GLG partners a $600 million-plus payout.
David Waller, a spokesman for Man Group, poured water on the idea of a potential power struggle. “The facts are that Peter Clarke is CEO and Manny Roman COO,” he said.
Even so, four executives in close contact with the executive committee that runs the group — two from Man and two from GLG — told Reuters that Roman ruled the roost with backing from GLG partners Noam Gottesmann and Pierre Lagrange.
Several high-level Man executives have already been shuffled out, including Martin Keller, head of institutional sales, replaced by GLG’s Raffaele Costa; and John Bennett, head of UK distribution, replaced by GLG’s Richard Phillips.
“All the key decision makers are from GLG,” said one former U.S.-based insider who asked not to be named.
As for management styles, Roman and Clarke come from extreme ends of the spectrum, the Europe-based executive said.
“Clarke is respectful, academic, mild-tempered and dislikes conflict, while Manny is brash and can intimidate people who disagree with him,” this person said.
Man stumped up a 55 percent premium for GLG to keep its rival’s coveted talent onside. The three GLG supremos — Gottesman, Lagrange and Roman — hold a 9 percent stake in the new group, worth $777 million. At 7 percent of assets under management, GLG was priced higher than most pure hedge fund firms, even when prices peaked before the financial crisis.
The deal will prove be an expensive transaction even if it goes well, said Evolution Securities analyst Mike Sanderson. “(It) risks being far too expensive if things do not go so well.”
Additional reporting by Laurence Fletcher in London, Editing by Sinead Cruise and Dan Lalor