Candriam Equities L Risk Arbitrage Opportunities

The Candriam Risk Arbitrage team run a single strategy across two funds with different risk profiles. The overall strategy has c. €786m of AUM, managed by a stable investment team over 18 years. The two funds are the Candriam Risk Arbitrage fund and Candriam L Equities Risk Arbitrage Opportunities. The Risk Arbitrage fund invests in only announced M&A deals and targets +150/200bp over €STR, and is designed as a low volatility product. Whilst the Candriam L Equities Risk Arbitrage fund has a higher return seeking mandate and targets c. +400bp (above €STR) with a volatility of 4-6%. To achieve this, the fund predominantly still invests in officially announced M&A deals, but focuses on transactions with higher spreads, utilises more leverage and can include broader events eg. non-binding proposals and squeeze-out offers. The process evaluates announced M&A deals via their in-house deal rate methodology, which initially screens announced deals from developed countries through a liquidity filter to produce an investable universe. Quantitative and qualitative analysis is undertaken to evaluate deals based on identifiable risk factors, which helps to reduce failure rate and ultimately determine their respective potential. After the analysis, deals are given a score (A-C), with investment decisions influenced by the expected risk/reward, deal timing, deal type and comparison with similar positions already in the portfolio. The fund can run with a gross exposure up to 400%, though is typically below this, and usually has between 30-60 positions in the portfolio.