Man Group snaps up 25% stake in Nephila
LONDON (Bloomberg) - Man Group plc., the world's largest publicly traded hedge fund manager, agreed to buy a stake in Nephila Capital Ltd., an investor in insurance-linked securities and weather derivatives, to broaden its range of investments.
The London-based company will pay $50 million in cash for a 25 percent stake in the investment manager, Man Group said in a statement on Friday.
The acquisition allows Man Group to offer customers investments related to weather and natural disasters. Insurance- linked securities, such as catastrophe bonds, typically offer above-average returns because investors may lose their entire stake in the event of a predefined disaster, such as a hurricane or earthquake. In that case, the investors' money goes to the security's seller, typically an insurer or reinsurer, to help cover claims.
Demand for catastrophe bonds, whose yields can top 15 percent as long as disaster doesn't strike, is rising following the credit market crisis.
The market tripled during the past three years to more than $13 billion.
Started in 1998, Bermuda-based Nephila has 25 employees and oversees about $2.4 billion in assets under management.
