GLG Sells Itself in Reverse Takeover

GLG Partners LP, one of Europe's largest hedge funds, said Monday it is selling itself in a $3.4 billion reverse takeover that will give it access to the U.S. stock market.

Under the terms of the deal with Freedom Acquisition Holdings Inc. (FRH) (FRH), the combined company will be named GLG Partners Inc. and will trade on the New York Stock Exchange. GLG, which is not currently traded, may also seek a listing in Europe.

"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," said Noam Gottesman, co-chief executive of GLG.

New York-based Freedom Acquisition is a "blank check" company, an investment vehicle that allows the parent company to raise money for acquisitions by listing on the stock exchange. Such companies reveal acquisitions after putting shares on the market.

Shares of Freedom Acquisition rose 73 cents, or 7 percent, to $11.18 Monday.

GLG, with $20 billion (14.9 billion euros) under management, will receive $1 billion (742.7 billion euros) in cash and 230 million shares of Freedom common stock, the company said in a statement. Freedom's shareholders will own approximately 28 percent and current GLG equity holders will own about 72 percent of the combined company's shares.

"I think its another example of securitizing the business in the same way that private equity has been buying up" businesses, said Richard Hunter, a broker at Hargreaves Lansdown in London. Management is "looking to crystalize the value of their business."

Freedom was founded last year by Nicolas Berggruen and Martin E. Franklin, chief executive of a consumer products conglomerate, Jarden. They will both join GLG's board of directors.

Berggruen's company is an investment vehicle for his family's money, whose assets in 2004 exceeded $1 billion. His grandfather, Heinz Berggruen, was a friend of Pablo Picasso and operated the family's art gallery in Berlin until his death earlier this year. Nicolas Berggruen's father, John, also operates a family gallery located in San Francisco.

High-risk and largely unregulated, hedge funds have traditionally been the investment domain of the wealthy. But the funds and private equity firms have become more popular investments because of their potential returns.

Shares of private equity group Blackstone Group shares rose 13 percent in their stock market debut Friday, as investors scrambled for a piece of the sixth-richest initial public offering in U.S. history. The company is worth about $38 billion. Blackstone shares fell $2.62, or 7.5 percent, to $32.44 Monday.

Around 9,400 hedge funds operated worldwide at the end of 2006, controlling assets of some $1.4 trillion (1.04 euros trillion). That's more than twice as many hedge funds as operated five years ago, while funds under management have nearly tripled during the same period, according to Chicago-based Hedge Fund Research Inc.

The 2.5 billion euro GLG transaction is subject to Freedom shareholder and regulatory approval. GLG expects to complete the deal early in the fourth quarter. [via]