We were not invested in United State Steel, which meant that we were relatively unaffected by the renewed volatility seen in September.
The fund posted a positive performance over the month
Main positive contributors to performance were: Capri, Silk Road Medical and Resurs Holding
Main negative contributors to performance were: Hess, Shinko Electric Industries and Albertsons
North America | 15.5 % |
Europe EUR | 7.0 % |
Europe ex-EUR | 6.8 % |
Others | 5.0 % |
Total % of alternative | 34.3 % |
Market environment
After a few months of relative calm, September was marked by a return to volatility in merger arbitrage spreads.
The US administration's delays in the acquisition of United State Steel by Nippon Steels led to sharp swings in the US steelmaker's shares: down 23% at the start of the month, followed by a rebound of almost 20% at the end of September!
As usual in the wake of such an event, there was a move to reduce the risk in portfolios, which led to a widening of certain merger arbitrage spreads. The HFRX Merger Arbitrage index fell by 0.55% over the month.
In addition, a number of deals came to an end, leading to a tightening of spreads: These include Network International, Resurs Holding, Silk Road Medical, Walkme and Copperleaf Technologies.
There was also good news for two deals that were in2nd Request: SouthWestern Energy and Hess obtained FTC approval.
1 deal failure to mention: in the US real estate sector, McGrath RentCorp and WillScot Holdings mutually terminated their merger plans.
As usual in the run-up to the US elections, the flow of new deals seems to be slowing, with only 22 announced this month (vs. 26 the previous month) for a total of $78bn.
This slowdown is noticeable in the US, but M&A activity remains buoyant in Europe and Asia, with annual volume growth of 13% and 75% respectively.
The return of private equity funds seems to be confirmed: financial operators now account for more than a third of acquirers.