July 19 (Bloomberg) -- Shares of MF Global, the brokerage unit of Man Group Plc, dropped almost 10 percent in their first day of trading, amid investor concern that financial services firms may suffer from the shakeout in credit markets.

Man Group, the world's largest publicly traded hedge fund manager, raised $2.92 billion yesterday from the initial share sale of MF Global, about 23 percent less than it sought. The stock fell $2.67 to $27.33, at 3 p.m. in New York Stock Exchange composite trading, and earlier sank 9.6 percent to $27.13.

The debut of MF Global, which handles trades in futures and options, follows a 25 percent decline in shares of Interactive Brokers Group Inc., the derivatives market maker that went public in May. Buyout firms Blackstone Group LP and Fortress Investment Group LLC have also seen investor demand dwindle. Blackstone shares have dropped 12 percent since its IPO last month. Fortress, which rose as much as 79 percent after its February share sale, has since shed 32 percent.

``A lot of people think brokerage firms may have a decrease in revenue because of what's going on with subprime,'' said Michael Nasto, senior trader at U.S. Global Investors Inc. in San Antonio. ``It's collateral damage. You don't have cheap money anymore.''

Investors are growing leery of securities firms as well. The cost of hedging against the risk of owning bonds of Bear Stearns Cos. and Lehman Brothers Holdings Inc. surged yesterday, sparked by Bear Stearns's disclosure of ``unprecedented declines'' in the value of securities backed by subprime mortgages.

Rattled Markets

Bear Stearns, in a letter earlier this week, told investors in two of its hedge funds that they'll get little if any money back after a plunge in the securities, which are backed by loans to homebuyers with weak credit. The losses sent shares of 11 of the 12 stocks in the Amex Securities Broker/Dealer Index down yesterday. Merrill Lynch & Co., the world's largest brokerage firm, dropped 3.3 percent and Morgan Stanley fell 2.8 percent.

After U.S. markets closed, Man Group sold 97.4 million shares of Hamilton, Bermuda-based MF Global yesterday at $30 apiece, the company said in a statement, raising about $900 million less than it sought. MF Global had set a range of $36 to $39.

The initial public offering, the second biggest in the U.S. this year, valued MF Global at $3.64 billion, based on 121.3 million shares outstanding. MF Global also plans to sell $1.2 billion of debt. Man Group kept 20 percent of MF Global after the offering.

`Decelerating' Business

The businesses of futures brokers ``may have peaked and revenue growth will be decelerating,'' said Alain Tchibozo, an analyst at ING Wholesale Banking in Paris.

Man Group, based in London, sold MF Global to focus on its hedge-fund business, which oversees more than $65 billion. The brokerage is the fourth-largest in the $4.5 trillion-a-day global futures market. Man Group built up the unit by acquiring assets from Refco Inc. when the New York-based futures broker went bankrupt in 2005.

MF Global's sale was managed by 16 investment banks, led by Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers, Merrill and UBS. Citigroup and JPMorgan arranged the debt sale.

Profit at MF Global more than tripled to $188 million in the year ended March 31, according to the company's prospectus. Revenue more than doubled to $5.7 billion. MF Global is run by Chief Executive Officer Kevin R. Davis, 46. He's been head of Man Financial since November 1999 and on the board of Man Group since April 2000.

MF Global competes with the Fimat Group unit of Paris-based Societe Generale SA and the Calyon Financial Inc. arm of France's Credit Agricole SA, which are merging.

MF Global will trade on the New York Stock Exchange under the ticker MF. Moody's Investors Service has an A3 credit rating on MF Global, while Standard & Poor's rates it BBB+.

Shares of Man Group fell 2 pence to 600.5 pence on the London Stock Exchange.

To contact the reporters on this story: Elizabeth Hester in New York at ehester@bloomberg.net; Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net.

Last Updated: July 19, 2007 15:07 EDT