GLG Partners, one of Europe's largest hedge fund firms, has lined up a U.S. stock market listing to help it expand and hire top managers, using a reverse acquisition with a shell company that values it at $3.4 billion.
The owners of London-based GLG, which has more than $20 billion of assets under management, will receive $1 billion cash and 230 million shares of Freedom Holdings common stock, worth about $2.4 billion.
GLG also agreed to sell a 3 percent stake each to the government of Dubai and German private bank Sal. Oppenheim.
Public flotations of such alternative investment vehicles have become one of the hottest areas of the IPO market.
Following the deal with Freedom, the combined company will be named GLG Partners Inc. and will trade on the New York Stock Exchange under the symbol GLG. GLG also said it would consider a dual listing in Europe.
Shareholders of Freedom -- a blank check company set up in Delaware last year with no products or customers solely to buy existing companies -- will own about 28 percent of the combined company. Current GLG stockholders will own about 72 percent.
This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets, including the U.S., Middle East and Asia, GLG founder and Co-Chief Executive Noam Gottesman said.
In addition, it will provide us with a publicly traded equity currency with which to compete for, retain and incentivize the most talented and sought-after professionals in our industries and pursue our growth strategies.
Gottesman will become chairman and co-CEO of the combined firm and his co-CEO Emmanuel Roman will keep the same role.
GLG follows a wave of investment firms to public markets. Fortress Investment Group LLC became the first U.S. private equity and hedge fund firm flotation in a debut that saw its shares soar 68 percent on the first day of trading.
Brevan Howard Asset Management, however, launched an IPO in March of its BH Macro Ltd. hedge fund in London that raised 23 percent less than originally targeted.
Meanwhile, Man Group, the world's largest listed hedge fund firm, is to float its U.S. brokerage arm, with an indicative valuation of between $4.6 billion and $5 billion in New York, while activist U.S. hedge fund Third Point plans to list one of its funds in London.
GLG is Europe's third largest hedge fund manager behind Barlcays Global Investors and Man Investments, according to the Alpha hedge fund trade magazine. It operates more than 40 funds, as well as managed accounts for high net worth individuals and institutions.
The deal is subject to shareholder and regulator approval and expected to be completed in the fourth quarter.
Perella Weinberg is advising GLG and Citigroup is advising Freedom.
(Additional reporting by Nick Zieminski in New York)