Europe’s GLG plans to go public in U.S.

GLG Partners, Europe’s third-largest hedge fund manager, plans to go public in the U.S. through a $3.4-billion combination with a New York-based “blank check” company.

London-based GLG agreed to sell a minority stake to publicly traded Freedom Acquisition Holdings Inc. for $1 billion plus 230 million Freedom shares. The so-called reverse merger would create a firm called GLG Partners Inc. that would trade on the New York Stock Exchange.

GLG would join Fortress Investment Group and Blackstone Group in going public in the U.S., encouraged by burgeoning demand from investors for private equity and hedge funds.

GLG last year earned $360 million on revenue of $621 million and distributed $201 million in profit to partners and staff members. The company manages more than $20 billion in assets.

The firm began in 1995 as a unit of Lehman Bros. Holdings Inc., which spun off GLG in 2000. Lehman retains a 15.3% stake. French and British regulators have fined GLG millions of dollars since last year for allegedly trading on inside information.

Freedom, founded by former hedge fund manager Nicolas Berggruen, raised $480 million in an initial public offering in December with the goal of finding a company to buy.

Freedom shares jumped 73 cents, or 7%, to $11.18 on Monday. On Friday, the stock surged 8.4% on heavier-than-normal volume. The company went public at $10 a share.

Current shareholders of GLG would own about 72% of the combined company, and Freedom investors would own the rest.