05/21/2014

Deal Struck for Majority Stake in Quant Shop

Numeric Investors has found a buyer.

For nearly two years, the quantitative fund shop has been looking for an investor to buy out a minority stake owned by private equity firm TA Associates. Now comes word that Numeric has reached an agreement with a large hedge fund manager based outside the U.S. to acquire a majority stake in the business. Speculation is focusing on Man Group, the London fund-management giant that in recent years has acquired controlling stakes in large alternative-investment operations including FRM and GLG.

TA has been angling to liquidate its position in Boston-based Numeric in order to cash out investors in a private equity vehicle dubbed TA 9, which formed in 2000 and acquired the Numeric stake in 2004. Thatís a fairly long holding period, even by private equity standards.

In late 2012 or early 2013, investment bankers conducted an auction for TAís stake in Numeric, but the bids were unacceptably low. Since then, however, Numericís assets have increased substantially ó to about $14 billion, from $7.7 billion in September 2012. The pending sale was brokered by Barclays and Freeman & Co.

Numeric was founded in 1989 by Lang Wheeler. The fact that TA is being replaced by a majority owner indicates that Wheeler and his partners will be cashing out some of their equity.

Numeric manages a series of long-only and market-neutral vehicles using quantitative models developed by its staff of 74. The firm counts 47 institutional clients including pensions, endowments and sovereign wealth funds.

TA, which also is based in Boston, has a long history of investing in financial-service firms, including Affiliated Managers Group, BATS Global Markets and Intercontinental Exchange. In 2012, it sold a stake in fund-of-funds manager K2 Advisors to Franklin Templeton.

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