Hedge Fund Arrowgrass Said to Raise $600 Million to Bet on M&A

Arrowgrass Capital Partners LLP has raised more than $600 million for a hedge fund speculating on the success or failure of mergers and acquisitions, according to two people with knowledge of the matter.

The Arrowgrass Customised Solutions I fund, overseen by Michael Edwards, will operate for 18 to 24 months, one of the people said. They asked not to be named because the matter is private. Nick Lord, a spokesman for Arrowgrass, declined to comment.

The capital raising makes the fund, which began trading in October, one of the largest started by a European money manager in the past year. About 85 percent of European hedge funds manage less than $500 million, according to data from Eurekahedge. London-based Arrowgrass was started by Henry Kenner and other former Deutsche Bank traders after they left the Frankfurt-based lender in 2008.

Hedge funds focusing on mergers and acquisitions bet that a target company will climb toward the offer price as a deal nears and that the bidder’s share price will fall. Companies agreed to spend $632 billion so far this year on M&A, following a record $3.8 trillion in 2015, according to data compiled by Bloomberg.

Merger-arbitrage hedge funds gained 3.3 percent on an average last year, compared with a 1 percent loss for those focused on stocks, according to data compiled by Hedge Fund Research Inc.

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