Fitch Ratings has affirmed
The Outlook is Stable.
Man is a Jersey-incorporated company and the
The rating actions are part of Fitch's global peer review of traditional investment managers.
Key Rating Drivers
Man's Long-Term IDR reflects its well-established franchise, especially in alternative strategies, as well as low leverage and strong recent profitability. The IDR also reflects Man's larger number of complex strategies relative to peers, requiring sophisticated risk management, and its higher proportion of potentially more variable performance fee income within revenue.
Man specialises in quantitative alternative strategies, supplemented by a smaller proportion of long-only activities. Its client base is predominantly institutional and it has built strong client relationships, benefiting from increased allocations to alternatives, with 48% of AuM represented by clients who invest in four or more products.
Man has grown AuM significantly in recent years, which should provide a cushion for moderate market downturns. In 2021, Man had record AuM inflows of
Man recorded strong earnings in 2021, with pre-tax profit more than trebling to
Fitch views Man's risk framework as robust, with risks well controlled and fund liquidity maintained during the volatile market conditions of the pandemic. Man's seed book, which had a total exposure of
Man's only debt comprises a moderate amount of repo financing (
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A further increase in scale and continued earnings resilience in more adverse market conditions could result in a more favourable business profile assessment and support an upgrade, in particular if achieved in conjunction with continued low leverage levels.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Increased debt, resulting in cash flow leverage of greater than 2x gross debt to FEBITDA, or significant double leverage.
Sustained underperformance in one or more business lines, leading to net outflows that result in weakened profitability. In particular, evidence that fund strategies are not behaving as expected or that risk management procedures are inadequate leading to significant negative fund performance would lead us to revisit our assessment of Man's business model.
A material reduction in Man's net cash or capital position, evidence of a significant increase in risk appetite, or a sizeable operational or reputational loss.
Material reduction in the fungibility of capital or liquidity within the group, or a weakening of governance standards.
Best/Worst Case Rating Scenario
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from '
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
(C) 2022 Electronic News Publishing, source