Merger arbitrage hedge funds bank on M&A resurgence
The resurgence in M&A volumes should be good news for merger arbitrage hedge funds. Though deal spreads remain tight, the growth in transactions in Q1 is fuelling expectations of higher returns.
A notable up-tick in corporate deal-making in the first quarter is fuelling expectations of better returns for merger arbitrage funds over the coming months.
Global mergers and acquisition (M&A) volume hit $809 billion in the first three months of 2011, up 28% from $634 billion a year ago, according to data from Dealogic.
US deal volume grew an astonishing 62% to $329 billion from $204 billion in the first quarter of 2010, while M&A activity in Asia-Pacific (excluding Japan) and Europe was up 31%
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