Increasing hedge fund merger activity | Paragon Alpha | Paragon Alpha

The increase in M&A activity will benefit merger arbitrage funds

By Matea Gucec

According to a Financial Times analysis, hedge funds that gamble on the likelihood that corporate mergers and acquisitions will close could profit from the dollar's persistent ascent versus the yen, the euro, and the pound.

Investors' purchasing power has increased as a result of the dollar's strength, and they may now be able to potentially purchase international enterprises for less money than in the past thanks to Greenback financing. Recently, one private equity executive even declared that "everything in the UK is on sale."

According to the report, Pierre di Maria, head of event-driven at Cheyne Capital in London, anticipates an uptick in UK M&A activity as a result of the weaker pound.

A screening tool has been developed by Felix Lo, a former trader for Millennium who now oversees a merger arb fund at Trium Capital, to track the impact of these currency fluctuations on international business transactions. According to him, US CEOs are the most optimistic and ready to close transactions, thus he anticipates US businesses will be active.


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