The group focuses on the development of exclusive arbitrage strategies, applying a selective opportunity-driven business model.
Its main goal is to produce high levels of profitability every year and to ensure sustainable growth. Since its creation in 1995, ABC arbitrage has benefited from the diversity of new financial markets and an abundance of products. The group firmly believes that this trend will continue to provide the arbitrage business with new fields of endeavour and growth opportunities.
ABC arbitrage group performances (excluding fair value adjustment) compare to other index
|ABCA gross return on equity||25%||25%||31%|
|ABCA return on equity (ROE)||12%||12%||14%|
ABC arbitrage group develops three main activities
Asset management for third parties is exclusively based on arbitrage operations and negotiable securities which can be traded on the majority of regulated markets. On the basis of its risk-management principles, the Group trades exclusively in securities with a sufficient degree of liquidity and appropriate market capitalization, in line with the arbitrage strategy being deployed.
The goal of these investment funds, which manage some of the arbitrage strategies successfully developed by the group since 1995, is to generate returns that are independent of market trends.
These funds, which are not available in France, are housed within ABCA Funds Ireland Plc and are offered only to qualifying investors as defined by the Irish Financial Regulator:
- a “professional client” within the meaning of Annex II of Directive 2004/39/EC (Mifid Directive); or
- an investor who receives an appraisal from an EU credit institution, a Mifid firm or a UCITS management company that it has the appropriate expertise, experience and knowledge to adequately understand the investment (a copy of this appraisal is annexed); or
- an investor who certifies that he/she is an Informed Investor. More specifically:
* he/she has such knowledge of, and experience in, financial and business matters as would enable him/her to properly evaluate the merits and risks of the prospective investment; or
* his/her business involves, whether for own account or the accounts of others, the management, acquisition or disposal of property of the same kind as the property of the Irish domiciled Qualifying Investors Funds.
The recommended minimum subscription is €5 million, although the fund only offers one type of unit for which the regulatory minimum subscription is €1 million.
Since the set up of the first alternative investment fund, in 2007, the offer in third-party asset management has been supplemented on a regular basis with the creation of new funds, enabling the Group to propose a diversified portfolio of alternative products:
- ABCA Opportunities Fund manages arbitrage operations of merger/acquisitions.
- ABCA Reversion Fund manages statistical arbitrage operations on Futures markets and ETF.
- ABCA Continuum Fund manages statistical arbitrage operations on stock markets.
- ABCA Implicity Fund exploits inefficiencies identified on the implied volatility surface.
- ABCA Multi Fund is a diversified fund which invests in the other funds managed by the group.
While recalling that recent regulations in this field have seen a great number of changes, the group is gradually pursuing its development project for third-party asset management in line with its initial policies, i.e. without haste and above all preserving its track record of consistent profitability.
Each year ABC arbitrage invested part of its funds in the groups’ alternative investment funds with the remainder managed under mandate.
ABC arbitrage has itself always been the first investor in each of its third-party fund issues in order to contribute actively to their development, while guaranteeing the resources to grow this activity.
This commitment is an essential advantage in the development of third-party asset management activities for outside investors, in that it is instrumental in establishing a track record, to maintain the activity in times of temporary outflows and to guarantee the convergence of interests between all investors.
With its established expertise in financial markets, the group is also in a position to propose financial engineering consulting services for third party institutional clients or qualified investors.
These initiatives are done on an ad hoc basis and are not a major area of growth for the group.