(pictured: Matt Whineray)
The New Zealand Superannuation Fund has made its first investment in a merger arbitrage strategy, committing NZ$200 million (A$183 million) to US hedge fund manager Ramius.
The mandate focuses on investment opportunities arising through merger and acquisition transactions, predominately in listed companies in North America and Europe.
Such event-driven strategies are rare in Australia and New Zealand, usually being incorporated in broader equity strategies by certain high-conviction managers.
A common benchmark used by merger arbitrage managers is to short the acquirer and buy the target. More often than not, unless the bid is agreed beforehand, a higher bid will be forthcoming. Also, more often than not, the market does not reward the acquirer for its aggression.
Ramius is represented in Australia and New Zealand by Damien Hatfield of Ascalon Capital.
Matt Whineray, NZ Super’s CIO, said merger arbitrage was designed to achieve a premium return over the long term. He said: “The NZ Super Fund’s long investment horizon means it is in a good position to take advantage of the returns offered by merger arbitrage. Ramius’s specialist skills and track record complement our investment priorities and return objectives.”