Shares in Man Group fell almost 2 per cent yesterday despite the promise of a $5 billion (£2.6 billion) windfall, as the UK’s largest hedge fund manager confirmed plans to spin off and float its US brokerage business.

Splitting Man Investments, the UK-based asset management business, and the brokerage, Man Financial, is likely to see the US arm valued at between $4.4 billion and $5 billion at flotation.

In a trading update released ahead of its results for the year ending March 31, 2007, Man Group said that the cash raised in the float, minus expenses and tax, will be returned to shareholders.

Man said that it would also retain a minority stake in the business, to be renamed MF Global, although the size of the stake will be dictated by the market climate. The float is expected to go ahead in the third quarter.

Peter Clarke, who yesterday took over as chief executive, said: “It’s a very significant amount and it’s a nice opportunity for shareholders to pick that up”.

However, analysts said that the cash had already been counted by investors because of lengthy speculation about the spin-off, and described the growth in assets under management for the full year as disappointing. Total funds under management are currently estimated to be about $61 billion, up from $49.9 billon last year.

Man reported net inflows for the year of $9.3 billion. The final quarter generated $900 million, down from $1.4 billion in the third quarter, $3 billion in the second quarter and $3.8 billion in the first quarter.

“There’s been a gradual deterioration of inflows and people see that as a sign that perhaps the momentum of the beginning of the year is running down,” said Michael Lond of Keefe, Bruyette & Woods.

Man’s net performance fees fell 15 per cent after a poorer performance from AHL managed futures, its biggest fund.

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