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HEDGE FUNDS ARE HIP TO THE BEAT AS FAR AS MERGERS AND ACQUISITIONS ARE CONCERNED
Welcome to Hedgestock. Early in June this year some 4000 hedge fund managers piled into the grounds of Knebworth, an English stately home in Hertfordshire, for a conference and "kick-asset rock concert".
The parallels with the 1960s iconic happening known as Woodstock are entirely deliberate. True, Jimi Hendrix and Janis Joplin are long dead (probably spinning in their graves at the thought of fund managers whooping it up) but the organisers found the next best headline act in The Who.
So why does Hedgestock matter in the cut-throat world of mergers and acquisitions? (And as for why The Who were playing, well more about that later.) To use showbiz parlance, hedge funds are the rockstars of global business. Increasingly, they hold the power to make mergers and acquisitions happen by taking short-term stakes in potential targets. They are unemotional about the outcome, and the best fund managers make billions for themselves each year.
Australia has seen massive growth in hedge funds. Although it can never compete on the scale of the US and Europe, over the past few years hedge funds have become pivotal in some of the nation's largest mergers and acquisition (M&A) deals. Exact figures of the hedge fund business are difficult to come by, but it's generally speculated there is up to AUD$158 billion of hedge money under management in Australia.
Other figures, which show that Australia is the largest hedge fund centre in Asia, suggest that cash in local hedge funds has tripled between 2003 and June 2005 to more than $AUD35.35 billion. There are 55 local hedge fund managers.
At the end of 2005 hedge funds controlled more than US$1.13 trillion (AUD$1.55 trillion) of cash globally, an amount that had doubled from three years previous.
The term "hedge fund" emerged in 1949 when Melbourne-born Alfred Winslow Jones (who returned to the US aged four...