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A view of London’s financial district. Clients pulled money from Man – once the FTSE 100-listed poster child for the hedge fund industry – for a fifth straight quarter, the firm said in October.TOBY MELVILLE/Reuters

Peter Clarke, the chief executive officer of embattled hedge fund firm Man Group PLC, is to step down, bowing to growing shareholder anger over the slow progress of the company's revival plan.

Mr. Clarke will hand over in February to chief operating officer and former GLG boss Emmanuel (Manny) Roman, Man said on Monday.

The position of Mr. Clarke, a 20-year company veteran who has headed the firm since 2007, had become untenable following two terrible years for the company characterized by poor performance and client losses.

Clients pulled money from Man – once the FTSE 100-listed poster child for the hedge fund industry – for a fifth straight quarter, the firm said in October.

Meanwhile its flagship fund AHL, which generates the bulk of the firm's revenue, has remained stuck below its so-called high-water mark, the level above which it can earn lucrative performance fees.

Investors welcomed Mr. Clarke's departure with shares trading sharply higher at 77.7 pence by 1600 GMT, up 5.5 per cent. Since Mr. Clarke took over, Man shares have lost 85 per cent of their value.

Shareholders will now be looking for signs that the raft of changes already announced – cutting costs, launching new funds and naming Jonathan Sorrell as finance director – is starting to work.

"I think it does go back to a fresh approach. They've got the infrastructure and the cost base of a much bigger firm and Manny should be much more focused on cost savings," said Stuart Duncan, an analyst at Peel Hunt.

Tough-talking Mr. Roman, who joined Man in 2010 after its takeover of hedge fund GLG, has gradually increased his position within the company and was widely touted as a successor to Mr. Clarke.

In winning over shareholders, he will need to show the company can pull in new clients.

Save for a brief upturn during the first six months of last year, Man has been losing assets since the financial crisis just as most big hedge funds have been winning money from pension funds and insurance companies.

Computer fund AHL has also lost ground – it fell 6.8 per cent in 2012 and is down around 2.7 per cent this year – to archrival Winton Capital in recent years.

Man's other business lines – its fund of funds platform FRM, as well as GLG, which it bought for a controversial $1.6-billion (U.S.) – have so far failed to offset the volatile revenues of AHL.

"This does not change the fundamentals or the challenges the company faces, but it could give them a fresh start with a new CEO that hopefully has a compelling strategy going forward," said Peter Lenardos, an analyst at RBC Dominion Securities.

Mr. Clarke will retire on Feb. 28, when the company reports its full-year results. Any sign Mr. Clarke will walk away with a large payoff is likely to be met with a hostile reception from shareholders.

"He was behind the GLG deal, which was hugely value destructive. Accordingly, given the rocky time shareholders have endured, I would be staunchly against a large payoff," said one top-40 investor.

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