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How AAA-rated manager is tapping M&A boom

How AAA-rated manager is tapping M&A boom

Investors should focus on exclusive corporate events in merger arbitrage, rather than taking a macro stance, according to Syquant Capital’s Xavier Morin.

Speaking to Citywire Selector, AAA-rated Morin said the outperformance of the €1.3 billion Helium Performance fund, is all down to ‘pure and simple corporate events’.

‘We allocate our event driven exposure to corporate events. We have a holistic approach to each corporate event as such events may have different technical effects on the share price. We only participate in deals where we have strong confidence and that show an attractive risk-adjusted return.’

‘In 2016 the main driver was the merger arbitrage allocation. There was a flurry of announced deals especially in the US, although this was not the record year we saw in 2015.’

Nonetheless, Morin said it was a much-sustained deal flow which enabled the fund to benefit from a strong growth flow in terms of the opportunities to invest in different deals.

‘That being said a large number of deals failed. One of them was Allergan/Pfizer - a tax inversion deal - we have never been a friend of tax inversion deals and we have avoided any deal where the tax inversion was a dominant factor.’

‘Whereas deals such as the SAB Miller/AB InBev deal and the BG/Shell deal were both positive contributors to the fund.’

‘In 2017, we remain confident about the business environment with a large scope of corporate event opportunities. Thanks to diminishing political uncertainties and a steady growth, we expect a potential catch up of Europe in terms of corporate activity.’

The Helium Performance fund returned 15.1% in euro terms, over the three years to the end of April in the event driven sector. This compares with a -0.8% sector average over the same time period.

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