Peacock approach a first for hedge funds

By Robert Lea

 

A £400m takeover offer for discount retailer Peacock is being backed by a consortium of six hedge funds.

In what would be the first corporate takeover in Britain by hedge fund managers, six specialist funds are providing the bulk of the money for the bid, which is being fronted by investment bank Goldman Sachs.

Among the hedge funds in the consortium is Och-Ziff Capital, the hedge fund that lent money to US tycoon Malcolm Glazer for his controversial £800m takeover of Manchester United.

Takeovers in which British listed companies are taken private are usually backed by private-equity houses, which use venture capital to take on the companies, shake them up and then sell or re-list them.

Hedge funds have hitherto been regarded as speculators, using cash from rich individuals or, increasingly, major institutions to make a quick buck in a special situation before moving the money on to the next punt. Their involvement in British takeovers has thus far been restricted to roles as providers of debt.

Investment bankers, however, are predicting that more public-to-private deals in the UK could be hedge fund-backed, simply because more deals are being done that way in the US.

It is thought many hedge funds are also looking increasingly to find other ways of using the cash piles they have built up to sustain the high returns promised to their investors.

Peacock shares have been on the drift in recent weeks. They opened at 310½p today, valuing the company's equity at £370m.