By Martin de Sa'Pinto
ZURICH | Tue Jan 11, 2011 9:32am EST
ZURICH (Reuters) - Three female fund partners are making inroads into
the male-dominated world of hedge funds with a merger-focused
investment strategy and a charter passing 25 percent of performance
fees to children's charities.
CIAM (Charity Investment Asset Management) co-founders Anne-Sophie
d'Andlau and Catherine Berjal met in 2003 when both managed merger
arbitrage funds, while Berjal knew the third co-founder Frederique
Barnier-Bouchet from when they worked at French banking giant BNP
Paribas (BNPP.PA).
"We had been talking for many years, and in 2009 we decided to launch
the fund. It seemed the right moment to create a new business, I
think we got the timing just right," said d'Andlau.
D'Andlau said mergers will be spearheaded by Europe's top 500
companies, which have amassed $500 billion (320 billion pounds) in
cash.
She said CIAM only invests in announced deals rather than hunting for
merger targets, which can tie up money and reduce returns if deals
are delayed or fail to materialise.
"We think focusing on announced deals is the only way to be totally
decorrelated from the markets. Trying to bet on merger targets
exposes funds to other risks," said d'Andlau.
M&A CONTRARIANS
Launched in September 2010, CIAM was seeded by its founders and
around a dozen investors, and takes a contrarian approach.
"If we believe a transaction will go through, we watch for the spread
(between the market price and the bidder's offer) to widen, maybe
because shareholders expect a better offer or the antitrust ruling is
taking longer than expected," said d'Andlau.
"These things can scare the market and widen the spread. We look to
invest when there is some negative news."
CIAM saw an opportunity in Swiss drugmaker Novartis's (NOVN.VX)
disputed bid for U.S eyecare company Alcon (ACL.N). It shorted Alcon
stock and bought Novartis, closing both positions when Alcon's
independent directors finally approved the tie-up.
"We loved that deal. We were convinced there was no reason for
Novartis to improve its original offer under Swiss law, so we took a
contrarian position to many who were trading the Novartis ADRs
(shares traded on U.S. exchanges)," said d'Andlau.
The company rarely invests on the day a deal is announced, a tactic
used by many other arbitrageurs, as d'Andlau said this tightens
spreads and can increase downside risk.
"Merger arbitrage is a dish you have to eat cold. You can only rush
out and buy into a deal if you think there is a higher offer in the
air; then you have to be quick."
Another of the company's recent successes was the General Electric
(GE.N) acquisition of Britain-based flexible pipeline systems maker
Wellstream (WSML.L).
Source: Reuters.Com
