Banks prepare to fight over the choice cuts

Mon Nov 1, 2004

JPMorgan's purchase of Highbridge has settled buyer nerves and established a valuation model

When JPMorgan announced its plans to acquire a majority stake in the multi-strategy hedge fund shop Highbridge, news also surfaced that Lehman Brothers was thinking of increasing its stake in London-based hedge fund manager GLG. Suddenly, the industry was gripped by merger mania. Countless other names were thrown into the pot, with a long list of investment banks, asset managers and private equity-style investors rumored to be ready to pounce.

It is easy to understand the excitement. JPMorgan was willing agree to put a value of more than $1 billion on Glenn Dubin and Henry Swieca's 12-year-old Highbridge business - a figure that represents about 15% of assets under management or a multiple of about 15 times pre-tax earnings, depending on how they are calculated. That is enough to persuade even the die-hard entrepreneurial managers that it might...

ISSN: 2151-1845 / CDC10004H

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