Man Group wins auction for Refco unit

British ? rm to pay $ 323M for assets

Man Group, the world’s biggest publicly traded hedge fund company, won an auction for parts of bankrupt futures broker Refco, outbidding at least three competitors.

Man Group said in a statement that it will buy customer accounts and assets of Refco’s regulated futures business for $323 million. Refco creditors, including money manager Jim Rogers, were planning to challenge the sale at a hearing in Manhattan scheduled Thursday in U.S. bankruptcy court. Judge Robert Drain must approve the deal. The creditors argue that some of the assets that Refco is selling belong to them.

The acquisition would give Londonbased Man Group control of what was the fourth- largest broker in the U.S. futures market, where $ 2.5 trillion of contracts trade each day. Man Group beat Interactive Brokers Group, the Dubai government and U.S. buyout ? rm J. C. Flowers & Co. in the bidding for New York- based Refco.

“ As an existing market participant, they’ll be able to quickly integrate the customer base,” said Dennis Dutterer, former chief executive of ? cer of Chicagobased Clearing Corp., which guarantees futures transactions at exchanges.

Man Financial, Man Group’s Chicagobased U.S. brokerage unit, ranks as the ninth- largest U.S. futures broker, data compiled by the Commodity Futures Trading Commission on Sept. 30 show. Pro ? t at Man Financial rose 21% last year to $145 million.

Man Group Chief Executive Of ? cer Stanley Fink said in a statement that the purchase of the Refco assetswill be “ value enhancing.” Shares of Man Group rose 2.6% in London trading.

The agreement with Man Group excludes the $746 million of regulatory capital that Refco put aside to guarantee trades. Interactive’s $858 million bid included regulatory capital, and would amount to $112 million if stripping those funds. The regulatory capital will remain with Refco under Man Group’s offer and will be used to pay creditors.

Founded in 1783, Man Group traces its roots to James Man, a sugar broker who provided sailors in the Royal Navy with rum. The company grew into one of the world’s largest sugar and cocoa traders, and then expanded into trading ? nancial futures. Man Group oversees about $44 billion of hedge fund assets, more than any competing company.

Refco’s auction follows an Oct. 17 bankruptcy ? ling caused by the disclosure that former CEO Phillip Bennett hid $430 million of debt. Bennettwas arrested Oct. 11 by U.S. authorities and charged the next day with securities fraud. He may face life in prison if he’s convicted.

Bennett on Thursday won a ruling granting him more lenient bail conditions after he couldn’t ? nd six people to co- sign a $50 million bond.

Refco owes creditors about $ 16.8 billion. Several customers, including Rogers, who used to work with billionaire George Soros, ? led objections to selling Refco before the judge assures them that their assets held by the company are protected and not sold.