LONDON (Reuters) - Hedge fund manager Cheyne Capital has raised more than $100 million (64 million pounds) for a fund to ride an expected surge in corporate activity such as mergers among medium-sized European firms, a source close to the group said.
The Cheyne European Event Driven fund raised the money from new and existing investors during June and July, having achieved a 21 percent return since its “soft” launch last October, the source said on Friday.
Event-driven funds bet on securities from companies which are undergoing or are expected to undergo significant change such as mergers, bankruptcy or debt restructuring, so called “special situations”.
Event-driven strategies have become more popular among hedge fund managers in recent months as firms struggle through the economic downturn while cash rich companies seek opportunistic acquisitions of rivals.
Among the trends expected by Cheyne is a surge in mergers among mid-cap companies, but also a rise in U.S. groups buying European rivals, spurred by a favourable exchange rate between the dollar and euro, the source said.
Funds that bet on M&A events often buy shares in the target company and short the acquirer.
Cheyne’s new fund invests in European equity and credit situations and seeks returns of at least 20 percent, the source said.