Cheyne Capital is planning a UCITS III-compliant merger arbitrage hedge fund.
The London-based firm is already raising money for the new vehicle and is “looking at a UCITS format,” Chris Goekjian, chief investment officer, told the Reuters Private Equity and Hedge Funds Summit.
“What you’ve seen generally is hedge funds adapting their investment strategies to fit UCITS rules,” he said. “Merger arbitrage is one of the areas, and it’s got the liquidity.”
Goekjian did not say when the new fund would debut—only that it would. “If we don’t, someone else will,” he said.
Mergers and acquisitions activity is beginning to rise, but “the relative amount of capital deployed in these situations is much less than it was,” Goekjian said.
“What you get in merger arbitrage today, and this shows how much capital there is versus say 2007, is you can have positive carry plus the upside of a potential other bidder,” he added.