BlackRock’s McKenna Said to Start Merger-Arbitrage Hedge Fundby
New Zealand wealth fund makes $200 million anchor investment
BlackRock’s event-driven strategies have amassed $1.1 billion
BlackRock Inc. has started a hedge fund with a $200 million investment from New Zealand’s sovereign-wealth fund that will seek to profit from bets on companies involved in takeovers.
The merger-arbitrage fund began trading this month and is run by former Harvard money manager Mark McKenna, who oversees the firm’s global event-driven strategy aimed at benefiting from takeovers, divestitures and management changes, according to a person with knowledge of the matter.
BlackRock is joining firms including Paulson & Co., Manikay Partners and Arrowgrass Capital Partners that have recently raised dedicated merger funds. These money managers expect returns for the strategy to be higher than they’ve been for years, people familiar with the firms said in April. The results could be hampered if merger activity, which reached a record in 2015, falters.
Ed Sweeney, a BlackRock spokesman, declined to comment on the new fund.
“We are pleased to deepen our existing relationship with BlackRock,” said Fiona Mackenzie, head of external relationships and partnerships at the New Zealand Superannuation Fund.
BlackRock has gathered about $1.1 billion for event-driven strategies, which includes $572 million for its event-driven hedge fund, $251 million for a UCITs pool in Europe and $115 million for a U.S. mutual fund, along with the new merger-fund investment, said the person.
The event-driven hedge fund, Global Event Partners, had $270 million in assets as of July 2015, a month after it started trading. It was up 2.5 percent this year through August, according to the person.
BlackRock in 2014 hired McKenna, who co-founded and ran Harvard Management Co.’s event-driven strategy. McKenna, a former lieutenant in the U.S. Navy’s nuclear-submarine force, spent six years at hedge-fund firm Caxton Associates and before that was a vice president in mergers and acquisitions at Citigroup Inc.