Paris-based investment manager Bernheim Dreyfus is launching a UCITS III version of its flagship Diva Synergy M&A fund.
Amit Shabi, a partner at Bernheim, told FINalternatives during a recent phone interview that the launch is in response to “growing investor demand for this kind of envelope.”
Diva Synergy is an event-driven hedge fund with a market neutral portfolio of roughly 40 liquid stocks that gained over 27% in 2010 on M&A activity. Shabi says it will not be difficult to replicate their successful strategy in a UCITS framework:
“Actually, it’s going to be quite easy for us because we manage a very liquid fund. We’ve managed it [for] more than four-and-a-half years with monthly liquidity but we were actually managing it as if it were daily liquidity. From the beginning, we decided to manage the fund with, first of all, no leverage and only using stocks in the portfolio, so all we have in the portfolio is stocks and futures—very liquid positions. Our core positions of capitalizations are capitalizations between $1 million and $10 million, fairly liquid instruments. There will be no problem to replicate on a daily basis—we’re launching a daily UCITS III and I believe that if not the first, we’re one of the first event-driven managers [to launch] a daily liquidity fund.”
Shabi says M&A activity is growing, most obviously in the U.S. but also in Europe. In fact, Bernheim Dreyfus expects M&A activity this year to rise 40% over 2010 and Shabi says they are “definitely...going to take advantage of this and surf on this M&A cycle.”
He’s particularly keen on pharmaceuticals, energy, technology and chemicals, as well as luxury goods which is, he says, a sector “that will start to move again.”
So far the firm has received commitments of $10 million for the new fund which offers two share classes: a retail share class with a minimum investment of $100 and an institutional share class with a minimum investment of $100,000 (or €100,000). The target for the fund, which began investing June 1 and is regulated by France’s Autorité des marchés financiers, is to be managing $100 million within a year.
Explaining why they’ve decided to launch a regulated vehicle now, Shabi says it’s simply a question of giving investors what they want:
“There’s a lot of demand, after the crisis, people had enough of gates, people had enough of lack of transparency and, in a way, in a UCITS format, managers have to be transparent and have to be liquid. So, in a commercial way, we have to address this and we have to address the investors’ needs.”