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Schroders unites with John Paulson for fund launch

Schroders unites with John Paulson for fund launch

Schroders has revealed plans to develop a merger arbitrage fund with renowned hedge fund manager John Paulson for its Ucits-compliant GAIA platform.

The fund, which is still in the development stage, is scheduled to be launched at the end of May.

The Schroder GAIA platform is designed to offer investors access to alternative investment strategies within a Ucits-compliant framework.

Speaking in a web conference, a spokesperson for Schroders said the group intends to add two new funds to this platform over the next couple of months, the first of which will be a merger and arbitrage-focused fund developed with New York-based Paulson (pictured).

The Schroders spokesperson said the end of May is the current working launch date and further details would be made available regarding style and process closer when it's official launch date is confirmed.

Paulson has already launched an Alternative Ucits version of one his hedge funds, his flagship Advantage product, which was made available to European investors through a similar platform run by Deutsche Bank in 2010.

The second fund, which is also in the development process, will focus on liquid distressed investment opportunities in equity and bonds, with a working launch date of June.

Paulson partnership

The merger arbitrage fund, which is still subject to regulatory approval, will be called the Schroder GAIA Paulson Merger Arbitrage.

It will be based on the Paulson International Limited fund, which launched in 1996 and controls $1.7 billion and has produced an annualised return of 12% since its inception.  

It will invest mainly in US, Western European and Canadian large cap public equities currently or potentially involved in mergers and other corporate events, including but not limited to exchange offers, bankruptcy reorganisations or liquidations.

The fund is benchmark unconstrained and will target an annualised return of 8-10% net of fees, with expected volatility of 6-8%. It can invest globally in equity, equity related and debt securities of companies and the strategy focuses on high quality, larger spread deals

Commenting on the arrangement, John Paulson, president of Paulson & Co, said: ‘We are very pleased to be partnering with Schroders and look forward to being able to offer our merger arbitrage capabilities to a wider audience via the strength of the Schroder GAIA distribution network.’

The Schroder GAIA platform is home to a number of large funds run in conjunction with third party managers, among them is John Brennan’s $2.7 billion Schroder GAIA Sirios US Equity fund, which Citywire Global revealed is set to hard close at the end of June.

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John F. Brennan
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