The asset manager Bantleon has exceeded the threshold of 100 million euros in assets under management in liquid alternative investment strategies within less than two years. Especially event driven equity strategies have attracted increased investor demand recently.
»Due to very ambitious valuation levels in almost all asset classes, investment strategies that develop largely uncorrelated to the broad market are coming to the fore,« says Sebastian Finke, Head of Equity Portfolio Management and Investment Solutions at Bantleon. »Given the best start to the year for mergers and acquisitions in a decade, we are currently seeing a broad spectrum of low-risk yet high-return investment opportunities, particularly in the area of event driven. Besides merger arbitrage, this particularly includes SPAC arbitrage.«
SPAC arbitrage is the provision of liquidity for Special Purpose Acquisition Companies (SPACs), i.e. shell companies through which unlisted companies can go public relatively easily. Since the capital provided is held in trust accounts, there is virtually no risk of loss for SPAC arbitrageurs. At the same time, participation in the price gains of the target companies offers high earnings potential.
Bantleon is among the early investors in the German-speaking region and uses SPAC arbitrage both as an important return component in a diversified event driven mutual fund as well as in a dedicated segregated account for a German insurance company. »The implicit loss limitation in combination with sometimes double-digit returns make SPAC arbitrage a highly attractive investment segment in which the needs of institutional investors can be addressed very individually,« explains Finke. »However, specialist knowledge is required. SPACs should not be allocated in a portfolio without careful consideration and in-depth analysis.«