Capitalizing on Merger Arbitrage Investment Opportunities in Asia Pacific Markets

Returns from Asia-Pacific merger arbitrage positions have proved consistently attractive over time, offering the additional benefit of portfolio diversification when compared to other equity strategies where returns are more susceptible to the vagaries of market cycles. With a new wave of mergers and acquisitions (M&A) activity and promoter-led take-private deals, buoyed in some key markets by heightened geopolitical tensions, merger arbitrage thrives as an investment strategy for well-prepared investors. Cash-rich companies that have weathered COVID-19, opportunistic family controllers and private equity firms now sitting on record levels of dry powder are creating attractive merger arbitrage opportunities. These investors are focusing on businesses in distress and takeovers or privatizations of companies which are currently undervalued by the market.

In this piece, we highlight some of the key questions investors consider when analysing merger arbitrage investment opportunities in the key public M&A markets in the Asia Pacific region.