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LONDON (Reuters) - Man Group (EMG.L), the world's biggest listed hedge fund, announced a rise in third-quarter assets under management, an acquisition and plans to buy back $100 million of shares, sending its stock as much as 17 percent higher on Friday.
Having fallen nearly 40 percent this year at Thursday's close, the shares were on course for their biggest one-day gain in more than seven years.
Man said it had $80.7 billion of assets under management at the end of September, up from $76.4 billion at the end of June and beating analysts' expectations by up to 4 percent, helped by investment gains of $2.5 billion.
Net inflows from investors in the quarter were $1.3 billion, it added, buoyed by demand from institutional clients.
Man also announced a $100 million share buyback and signaled plans to invest more in real assets such as property through its acquisition of U.S. and Europe-based investment manager Aalto.
"Man has exceeded expectations on flows, announced an attractive deal that gives it sought-after private markets exposure and resumed its share buyback," Credit Suisse analysts told clients. They have an 'outperform' rating on the stock.
Unlike some rivals, Man said it had seen little benefit on its assets from a slide in the value of sterling after Britain's vote to leave the European Union.
"In a difficult market environment, we are pleased to report a $4.3 billion increase in funds under management," new Chief Executive Luke Ellis said.
Man said it had agreed to buy Aalto, which currently manages $1.7 billion in real estate assets - the latest in a string of deals. It will also launch Man Global Private Markets to further diversify its product range.
Against a backdrop of weak market returns, fee pressure from investors and tougher regulations, many asset managers are looking to diversify by launching new investment strategies or moving into new countries, often by joining forces to cut costs.
The deal will see Man pay an initial $25 million in cash and shares, with the potential to rise to $207 million, depending on performance, it said.
The new unit will focus on developing strategies across markets such as real estate, credit and infrastructure, it said.
"The move into private markets seems a sensible diversification, although it has not always been easy in the past to cross sell liquid and less liquid alternatives," Bank of America Merrill Lynch analyst Philip Middleton said in a note, reiterating his 'buy' recommendation and 155 pence price target.
At 0840 GMT, Man shares were up 14 percent at 124 pence.
Reporting by Simon Jessop and Sinead Cruise; Editing by David Goodman and Mark Potter