Boussard & Gavaudan Holding Ltd (GBP): Interim Management Statement for the Quarter ended 31 March 2023

Boussard and Gavaudan Holding

11/05/2023 17:01

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230511:nGNE2G40sj&default-theme=true


Please find attached the Interim Management Statement for the Quarter ended
31st March 2023.

 

 

 

 

 

 

 

 

Boussard & Gavaudan Holding Limited

A closed-ended investment company incorporated with limited liability under
the laws of Guernsey, with registration number 45582.

 

 

Interim Management Statement

For the Quarter ended 31st March 2023

 

 

I. Principal Activities

 

Boussard & Gavaudan Holding Limited (“BGHL” or “the Company”), a
closed-ended investment company incorporated under the laws of Guernsey,
announces its interim management statement for the period from 1 January to 31
March 2023 (“the period”).

 

The Company is registered with the Dutch Authority for Financial Markets and
is listed on the NYSE Euronext Amsterdam, and the London Stock Exchange.

 

During the period, BGHL has invested indirectly in BG Master Fund ICAV (“BG
Fund” or “the Fund”), a Europe-focused multi-strategy hedge fund
established in Ireland and authorised by the Central Bank as a Qualified
Investor Fund (QIF), through a dedicated share class of the feeder fund, BG
Umbrella Fund Plc. The Fund aims primarily at arbitraging instruments with
linear or non-linear pay-offs on equities and credit markets. The overall
investment objective of the Fund is to provide investors with consistent
absolute returns, primarily through investing and trading in financial
instruments of companies incorporated in, or whose principal operations are
in, Europe.

 

In addition, a proportion of the net assets of BGHL may be invested in other
hedge funds and/or other financial assets.

 

Boussard & Gavaudan Investment Management LLP (“BGIM” or “the Investment
Manager”) is the Investment Manager for both the Company and the Fund.

 

 



 

II. Highlights

 

                                     31-Mar-23   31-Dec-22   
 Assets under management (€m)        331         345         
 Market capitalisation (€m)          273         276         
 Shares outstanding                  12,422,502  12,433,763  

 

 

              NAV per Share          Share price*           Discount to NAV        
              € shares    £ shares   € shares    £ shares   € shares    £ shares   
 31-Mar-23    € 26.64     £23.52     € 22.00     £19.00     -17.42%     -19.21%    
 31-Dec-22    € 27.77     £24.43     € 22.20     £20.00     -20.06%     -18.12%    
 Performance  -4.07%      -3.73%     -0.90%      -5.00%                            

 

*Amsterdam (AEX) market close for the Euro Share and London (LSE) market close
for the Sterling share

 

III. Performance

 

 

Global equity markets rallied during the period, in particular in Europe with
the Euro Stoxx 50® Total Return up +14.2% while in the US the S&P500® Total
Return was up +7.5%. The market implied volatility measure VStoxx® dropped
from 20.9% to 19.4% and credit markets tightened with the iTraxx Crossover®
(S38) moving from 474bps at year-end to 406ps at the end of March.

 

 

 

1. BG Fund

 

BG Fund (EUR B) contributed negatively for the quarter.

 

 

1.1. Volatility strategies

 

Mandatory Convertible Bond Arbitrage

Mandatory convertible bonds contributed slightly positively during the period
with performance driven by a general repricing in the market. No new issues
were seen albeit the Investment Manager remains confident that supply is
coming given the general pivot towards hybrid securities from issuers looking
to reduce borrowing costs.

 

Convertible Bond Arbitrage

The period saw convertible bonds giving back some of its previously positive
performance over the last few months.

In particular, US convertibles suffered mainly because of the Silicon Valley
Bank (SVB) and Credit Suisse situations, which caused the US two-year yield to
drop very quickly. The sharp drop in rates adversely impacted interest rate
hedges as convertible bond prices lagged; however these same hedges have
supported the portfolio against previous moves and the Investment Manager
expects some normalisation. Pricing for most European CBs was generally soft
due to higher credit spreads and very low liquidity in the markets. There was
no panic selling, but poor liquidity meant some low prints in very small
volumes.

The Investment Manager remains very constructive on the positions in the book
which continue to carry well. The Investment Manager continues to grow the
convertible book and sees a growing number of prospective opportunities in the
pipeline.

 

Volatility Trading

Volatility trading contributed positively to performance in March as news flow
helped to drive vol of vol higher. The Investment Manager traded actively
during the period of maximum stress which had led to the creation of some very
attractive, albeit relatively short-lived, opportunities. Dispersion
strategies continued to carry well.

Warrant Trading

Warrant arbitrage & SPACs contributed slightly positively.

 

 

1.2. Equity Strategies

 

Equity strategies suffered during the quarter. They were initially impacted by
a general rally in short hedges as liquid stocks and indices outperformed
idiosyncratic positions. Following this, uncertainty caused by the SVB
bankruptcy and the Credit Suisse debacle, combined with renewed fears of
recession from weaker economic data generated some further market volatility.
This particularly impacted special situation positions as the market worried
that the unstable macro environment may delay those catalysts. This
notwithstanding the core theses remain intact and the Investment Manager
expects these positions to realised their embedded value. Despite the market
to market volatility the period also saw several positions continue to perform
well due to both delivering strong results and where harder catalysts were
present.

 

Corporate activity is still much lower than expected in M&A, but as the
picture stabilises, and companies adjust to the new interest rate environment,
the Investment Manager expects activity to pick up further.

 

 

1.3. Credit Strategies

 

Capital Structure Arbitrage

Capital structure arbitrage was flat.

 

Credit Long / Short

Credit long / short contributed positively during the period benefiting from
the general positive trend.

 

Credit Special Situations

Credit special situations were the main positive contributor to performance
this quarter thanks to a combination of ongoing corporate improvements in the
portfolio, a restructuring trade which was finalised in March and due to be
completed in July as well as active trading around the restructuring of a
Swiss bank.

 

 

1.4. Trading

 

Trading contributed negatively during the period, mostly due to the equity
quantitative trading. This strategy has been a very helpful tool for risk
managing the portfolio for many years however it has recently been too slow to
react to rapid macro developments and the position is being cut pending
further assessment.

 

 

2. Investments Other Than BG Fund

 

The contribution of this investment was flat on the period.

 

Rasaland Investors (“RLI”)

Rasaland Investors (“RLI”) RLI is a holding company structured as a
private equity fund in terms of fees and organisation and managed by BK
Partners. BGHL holds the RLI shares through Campastros, S.L.U., a wholly-owned
holding company in Spain. RLI is dedicated to investing in land, hotels and
high-end resort developments in Mexico. RLI’s main asset is a majority
interest in ACTUR, a private company owning the land developing assets.
ACTUR’s other shareholders are Mexican public institutions.

In July 2020, RLI made a cash tender offer to buy back its own shares, for a
price per share of US$0.12270. The valuation of BGHL’s investment in RLI
shares was marked down on 31 August 2020, using the US$0.12270 per share price
as the estimated fair value of the RLI shares. This price represents a circa
80% discount to the latest published NAV per share.

 

 

IV. Outlook

 

The Investment Manager continues to be fully committed to the strategies of
the Company.

 

 

For further information contact:

 

 

Boussard & Gavaudan Investment Management LLP

 

Emmanuel
Gavaudan                (London)                +44
(0)20 3751 5389

 

François-Xavier
Baud                (Paris)                        +33
1 44 90 39 47

 

 



 

 

 

 

Disclaimer

 

 

 

The Company is established as a closed-ended investment company domiciled in
Guernsey. The Company has received the necessary approval of the Guernsey
Financial Services Commission and the States of Guernsey Policy Council. The
Company is registered with the Dutch Authority for the Financial Markets as a
collective investment scheme pursuant to article 2:73 in conjunction with 2:66
of the Dutch Financial Supervision Act (Wet op het financieel toezicht).
The shares of the Company (the "Shares") are listed on Euronext Amsterdam.
The Shares are also listed on the Official List of the UK Listing Authority
and admitted to trading on the London Stock Exchange plc's main market for
listed securities.

 

This is not an offer to sell or a solicitation of any offer to buy any
securities in the United States or in any other jurisdiction. This
announcement is not intended to and does not constitute, or form part of, any
offer or invitation to purchase any securities or the solicitation of any vote
or approval in any jurisdiction, nor shall there be any sale, issuance or
transfer of the securities referred to in this announcement in any
jurisdiction in contravention of applicable law.

 

Neither the Company nor BG Fund has been, and neither will be, registered
under the US Investment Company Act of 1940, as amended (the "Investment
Company Act"). In addition the securities referenced in this announcement have
not been and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act"). Consequently any such securities may not be
offered, sold or otherwise transferred within the United States or to, or for
the account or benefit of, US persons except in accordance with the Securities
Act or an exemption therefrom and under circumstances which will not require
the issuer of such securities to register under the Investment Company Act. No
public offering of any securities will be made in the United States.

 

You should always bear in mind that:

 

- All investment is subject to risk;

- Results in the past are no guarantee of future results;

- The investment performance of BGHL may go down as well as up. You may not
get back all of your original investment; and

- If you are in any doubt about the contents of this communication or if you
consider making an investment decision, you are advised to seek expert
financial advice.

 

This communication is for information purposes only and the information
contained in this communication should not be relied upon as a substitute for
financial or other professional advice.

 

 

VC 01.05.15.01

 


Attachment
*     Interim management Information - Q1 2023
(https://ml-eu.globenewswire.com/Resource/Download/b5df6952-ea8c-4636-bbb5-ec55f05b99db)